In 2023, New York City implemented Local Law 18 (LL18), one of the strictest regulations on short-term rentals in the United States. The law aimed to ease pressure on the housing market by returning apartments used as Airbnb to the long-term rental pool and, ultimately, to curb rent increases. However, two years later, the results show that these goals were not achieved – and in some cases, the problems worsened.
What the Law Stipulated
- Short-term rentals (under 30 days) are allowed only if the host resides in the property during the stay.
- No more than two guests are allowed at a time.
- It is prohibited to rent out an entire apartment for less than 30 days.
- All hosts must register with the City and obtain approval.
- Platforms (Airbnb, VRBO, etc.) are required to block bookings for unregistered properties.
In practice, the law led to a massive decline in active listings, with short-term rentals dropping by 80–90% within a few months (AirDNA).
Market Outcomes
1. Collapse of Short-Term Listings
Active listings under 30 days fell from around 22,000 in the summer of 2023 to fewer than 4,000 in 2024. This sharp decline particularly affected small hosts who relied on Airbnb income to pay mortgages or bills.
2. Rents Remained High
Despite the removal of thousands of listings, rents in New York City did not fall – they continued to rise. In many areas, rents increased by 3–4% in the first year of the law’s enforcement, with median rents in Manhattan exceeding $4,000. At the same time, vacancy rates remained stable at around 3.4% (NY Post).
3. Hotels as the Main Beneficiaries
The implementation of Local Law 18 in New York City led to a dramatic reduction in short-term rental listings. The gap in accommodation supply was almost entirely absorbed by hotels, which experienced:
- higher occupancy, as many visitors who could no longer find Airbnb rentals turned to hotel options,
- increased prices, since the limited supply of alternatives allowed hotels to raise their daily rates with little competition.
This created a new imbalance in the tourism market, strengthening the hotel industry at the expense of both travelers and small property owners who were excluded from the market. Visitors faced higher prices and less flexibility, while local communities lost part of the income that came from alternative accommodation models.
Seen through the Greek lens, the parallels are striking:
- In Greece, the hotel industry is the primary opponent of short-term rentals, claiming that they distort the market.
- However, just like in New York, evidence shows that restricting Airbnb does not reduce rents but rather reinforces the hotel sector, giving it greater market share and pricing power.
- The result is the strengthening of a quasi-oligopolistic model of hospitality, which reduces options for travelers and limits income opportunities for small-scale property owners.
The lesson from New York is clear: when regulatory policies are designed primarily to protect hotel interests, the outcome is higher accommodation costs and reduced competition, without any real improvement in affordability or relief for permanent residents.
4. Unintended Side Effects
- A black market of unregistered rentals emerged, with some hosts continuing their activity illegally.
- Small businesses in neighborhoods outside Manhattan were negatively impacted by reduced visitor traffic.
- The political debate intensified, with growing calls for more balanced and realistic regulation.
Why Didn’t Rents Fall?
- Limited impact: Short-term rentals represented a small portion of the housing stock, so their removal could not significantly change overall rent levels.
- Inelastic demand: Housing demand in New York remains extremely high due to population size and limited new construction.
- Shift, not reduction: Some units moved to the long-term market, but at high rents, keeping upward pressure on prices.
Conclusion
New York’s case shows that bans and extreme restrictions are not an effective solution to the housing crisis. Instead, they can result in lost income for small landlords, higher hotel prices, and persistently high rents.
This experience serves as a lesson for other cities: balanced policies are needed – policies that protect housing availability while also allowing for the legal and controlled growth of short-term rentals.
