Airbnb’s New York listings are mostly illegal, attorney general says

October 16, 2014, 3:47 PM UTC
Photo by Bloomberg — Getty Images

New York’s Attorney General Eric Schneiderman is cracking down on Airbnb.

Schneiderman is looking to shut down the online marketplace’s listings that he argues violate local hotel laws, which are in place to prevent people from renting residences for less than 30 days unless the occupants are also home, according to a release. A new state report found that nearly 72% of the site’s listings are illegal, based on the state’s laws.

“This report raises serious concerns about the proliferation of illegal hotels and the impact of Airbnb and sites like it on the City of New York,” said Schneiderman.

Schneiderman’s report found that local Airbnb bookings between the start of 2010 and June 2, 2014 brought in about $304 million in revenue for hosts, and almost $40 million of that went to Airbnb as part of its broker commission. One commercial user made $6.8 million in less than five years across 272 unique listings.

Only about 6% of hosts ran such large-scale operations, although they accounted for 36% of all rental transactions and 37% of total revenue — or a total of $168 million.

The data were obtained after the attorney general’s office issued a subpoena for information about users of the Airbnb site. The online home-sharing service reached a settlement with the investigators in May after fighting the subpoena for almost six months.

Airbnb said the report relies on incomplete and outdated information. It does not account for more than 2,000 listings that the company removed from the site, and each space is subject to different rules that make a “blanket statement” like Schneiderman’s unfair, the company said.

“That kind of uncertainty and lack of clarity is exactly why we’re advocating for clear, fair rules for home share,” said an Airbnb spokesperson. “We need to work together on some sensible rules that stop bad actors and protect regular people who simply want to share the home in which they live.”

Schneiderman’s office is worried that this model creates a host of negative outcomes for the city. Short-term rentals are displacing long-term housing options during a period of record-high rents. New York City is losing millions from lost hotel taxes. And the service, which operates without current city or state oversight, poses safety issues for tourists and neighborhood residents.

Airbnb has been operating in the New York City area since 2008, helping to match up travelers with local apartments. It operates in over 34,000 cities around the world, each with a different legal structure for short-term rentals and hotels.

San Francisco, where the service had previously operated outside current laws, recently passed initial legislation to legalize the service. In that way, legislators can provide oversight as well as impose certain regulations to protect guests as well as tenants of a city that has also seen record high rents in recent years.

Airbnb has appealed to New York City residents by arguing the service is good for their city. The company posted advertisements in local subways that say “New Yorkers agree: Airbnb is good for NYC” with images of local tenants that use the service.

The Internet home-sharing service has also signed on as a multi-year sponsor for the New York City Marathon, which generates about $65 million in revenue for the hospitality industry annually. The value of the sponsorship deal was not disclosed and will include branding, signage and event opportunities.