Airbnb deemed illegal in New York City in landmark ruling

Linsey Fryatt 2013-05-21 1

Officials in New York City have ruled that some hosts using Airbnb, the game-changing peer-to-peer holiday rental service are acting illegally.

no vacancy

The case centred around Nigel Warren, a casual Airbnb user who rented out his East Village apartment for $105 per night, violating the 2010 “Illegal Hotel Law” that prevents individuals from renting out properties for fewer than 29 days.

Warren initially faced fines of $7,000 from the the New York City Environmental Control Board (ECB). While this has been lessened to $2,400, the ruling acts as an interesting landmark case for the disruptive business model that lets users privately rent out their rooms or apartment to holidaymakers.

The ruling doesn’t mean that all Airbnb hosts will be faced with fines, however: it can only be enforced as a secondary violation. So if a complaint has been raised for something else and you’re found to be breaking the hotel law in addition to this.

Airbnb, an ex-YCombinator company founded by Brian Chesky and Joe Gebbia, has been quick to intervene in the case, and released this statement: “This decision runs contrary to the stated intention and the plain text of New York law, so obviously we are disappointed. But more importantly, this decision makes it even more critical that New York law be clarified to make sure regular New Yorkers can occasionally rent out their own homes. There is universal agreement that occasional hosts like Nigel Warren were not the target of the 2010 law, but that agreement provides little comfort to the handful of people, like Nigel, who find themselves targeted by overzealous enforcement officials. It is time to fix this law and protect hosts who occasionally rent out their own homes…”

A bumpy ride for peer-to-peer services?

New York has become the battleground for Airbnb’s difficulties with regulators over issues such as tax and health and safety. According to The Verge, Airbnb took 300,000 bookings in New York City in 2012, and is looking to take $1 billion in bookings in the city this year.

The company, which operates in 26,000 cities and 192 countries worldwide and is currently valued at $1.3 billion said the law is aimed at tenants who convert residential property into full-time illegal hotels and is being misconstrued by the authorities.

In Germany, local competitors include Rocket Internet clone Wimdu and Stephan Uhrenbacher’s 9Flats. Airbnb has faced similar legal skirmishes in Amsterdam earlier this year when local authorities cracked down on illegal hotels. This latest ruling could spell a bumpy ride for peer-to-peer services that prove problematic for legislation that hasn’t caught up to accomodate these new business models.

Image credits:
No Vacancy: flickr user camkage

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