New York Cracks Down On Illegal Short-Term Rentals; Airbnb Fights Back

New York on Friday passed a bill to cut down on illegal short-term rentals—but before the sun set over the Big Apple, Airbnb had vowed to fight back with a lawsuit to stop it.

In one of the strictest actions in the nation, the bill sets a fine of up to $7,500 for hosts advertising a home rental of 30 or fewer days. Officials hope the hefty fines will better deter New Yorkers from turning their homes into quasi-hotels through the site, a practice that has been illegal in New York City since 2010.

New York City is Airbnb’s largest U.S. market, generating about $1 billion in rentals last year, according to The New York Times.

Airbnb responded filing a lawsuit against the state Friday, claiming the legislation “would impose significant immediate burdens and irreparable harm on Airbnb” and violates the company’s constitutional right to free speech. “In typical fashion, Albany back-room dealing rewarded a special interest—the price-gouging hotel industry—and ignored the voices of tens of thousands of New Yorkers,” said Josh Meltzer, head of the company’s New York public policy.

Regulators and the hotel industry have long criticized Airbnb for enabling what amount to illegal hotels; in New York in particular, real-estate developers control thousands of apartments in which they never intend to live, but buy them specifically to rent out to Airbnb users. The American Hotel & Lodging Association (AH&LA) has previously accused Airbnb of “facilitating the creation of a black market for illegal and unsafe commercial rental properties that don't follow any of the same regulations as legitimate hotels.”