Testimony: NYC Must Maintain Universal Short-Term Rental Regulations
Samuel Stein
Thank you to the New York City Council’s Committee on Housing and Buildings for the opportunity to testify today. My name is Samuel Stein, and I am a senior policy analyst at the Community Service Society of New York (CSS), a nonprofit that promotes economic opportunity for all New Yorkers. CSS uses research, advocacy, and direct services to champion a more equitable city and state. Over the past 180 years, we have consistently fought for housing resources and rights for New Yorkers at the city, state, and federal levels, including the establishment of universal housing quality standards, the production of social housing, the enactment of rent regulations, and the expansion of rental assistance programs.
I am testifying today in opposition to Intro 948, a bill that would, among other things, allow owners of one- and two-family homes to convert their residential units into unregulated hotels. As CSS demonstrated in our recent report, Homes Not Hotels, this would be a grievous error, which could lead to the displacement of largely low-income, plurality African American tenants, and make homeownership even less attainable for first-time homebuyers.
Here are a few of our key findings:
1. Eighteen percent of New York City renters live in small, market-rate buildings.[1]
- While New York City is known for its high-rises, there are 327,100 rentals in buildings with one or two units, housing nearly 894,000 tenants. In fact, there are more rentals in one- and two-unit buildings than in three-to-five-unit buildings or six-to-nineteen-unit structures.
- Few of these tenants are protected by rent stabilization or Good Cause, and 45 percent (approximately 400,000 people) do not have a lease. The vast majority of these leaseless tenants—86 percent—never had a lease in their current home. All this makes it easier for landlords to displace long-term tenants to make way for more profitable short-term renters.
- Most long-term tenants in one- and two-unit buildings pay lower rents than market-rate renters in bigger buildings. In 2022, the median rent in market-rate units (those not covered by rent stabilization or any another form or rent regulation) was $2,000 per month, while the median rent in one- and two-unit buildings was $1,860. Twenty-six percent of tenants in one- and two-unit rentals are Black—nine percentage points higher than in market-rate apartments overall.
2. Allowing host-less short-term rentals would increase the price of purchasing a one- and two-unit property.
- In 2022, the median rent for one- and two-unit rentals was $1,860. With a standard 95 percent occupancy rate, a landlord can expect to generate $21,200 in annual gross income from one unit or $42,400 from two units on the long-term rental market. In contrast, the median daily price for a whole-home rental in a one-or two-unit building was $150 on Airbnb, plus a typical $95 cleaning fee.[2] Over the course of a year, with a 50 percent occupancy rate, an owner turning a one-unit building into an Airbnb could expect more than double the annual gross income: $44,700. If they list both apartments, they could earn up to $89,400.
- Deregulation of one- and two-unit buildings could impact certain buildings with three rentable units. Accessory Dwelling Units (ADUs)—allowed in some parts of the city through the passage of Mayor Adams’ City of Yes for Housing Opportunity rezoning program—do not count as additional units for these purposes.[3] Therefore, if an owner of a duplex adds an ADU, the three rentable units would still be considered a two-unit building under this potential legal change. There is a $70,000 difference in annual gross income between a building with three long-term tenants ($63,600) versus three short-term rentals ($134,000).
- From a real estate investment perspective, the most important metric is a property’s Net Present Value (NPV), which calculates the current investment value of a property based on the profit it may generate in the future. The higher the NPV, the greater the speculative pressure on a property, making the ongoing tenure of pre-existing tenants more tenuous. CSS’s model shows that the NPV for a one-unit Airbnb conversion ($410,700) is nearly eight times higher than that of a long-term, one-unit rental ($52,400). For a two-unit Airbnb, the NPV climbs to nearly $970,000, and for a three-unit Airbnb (i.e. a two-unit building plus an ADU), the NPV soars to more than $4 million.
- These potential profits could drive sales prices far beyond the reach of working-class New Yorkers seeking to purchase their first home.
3. Higher sales prices would result in higher rents for homes in one- and two-unit properties.
- Like in other overheated real estate submarkets, investors would bid up the sales price of any one- and two-unit dwelling on the market. They would also doggedly pursue (and even harass) homeowners to convince them to sell—whether or not that is the homeowners’ wish.[4]
- A regulatory rollback would drive up sales prices, eventually making renting to long-term tenants no longer economically feasible. Under these conditions, either the sellers or the new owners would seek to displace long-term tenants, who have very few tenure protections. This would create great hardships for individual households and put further strain on New York City’s already historically tight rental housing market.
We recognize that struggling homeowners need ways to maintain the affordability of their homes, but we urge the city to pursue public policy interventions that address this problem directly, rather than re-introducing short-term rentals in a way that will negatively impact a large and legally vulnerable segment of New York’s renter population. New York City must retain its universal short-term rental policies and prevent tenant displacement and rental stock loss.
Notes
[1] 2023 New York City Housing and Vacancy Survey.
[2] Data on Airbnb listings was compiled by Inside Airbnb, which collects publicly-available listings on the platform around the country. We then cross-checked that data with New York City’s PLUTO land use database to confirm the building’s unit count. Cleaning fee estimates are more difficult to calculate. The estimate we used for our analysis is based on online Airbnb data aggregators like Rentals United.
[3] Although the final version of “City of Yes” passed in December 2024 limited the expansion of Accessory Dwelling Units (ADUs) in many districts, ADUs will still be allowed under certain circumstances. Future zoning reforms may increase their availability in more one- and two-unit buildings.
[4] The City, “Harried East New York homeowners seek ban on house flippers,” March 2, 2020.