February 20, 2015

"The real culprit here is Airbnb, which makes millions by encouraging New Yorkers to violate their leases without even informing them of the risk."

"This decision reinforces what tenant advocates and I have been saying all along — almost all NYC residents who list their homes on sites like Airbnb are violating the terms of their leases and putting themselves at risk of eviction."

64 comments:

Nonapod said...

They exploited the rent stabilization system and should be punished, but I still think rent control in general is a dumb idea.

Michael said...

With very few exceptions, none of which come to mind, rent control/stabilization is always and everywhere a bad idea. It invariably leads to massive corruption - of which this is a prime example - and to the stagnation and decline of the housing stock. Any time the law treats something that is not property (like a leasehold or a job) as though it were property, bad things follow.

Edmund said...

@Nonapod Why do you think rent control in NYC is a bad idea? Don't you know that we need to have affordable housing for workers so we can lick the Nazis and the Japanese? Buy War Bonds!

Scott said...

Ikezi paid only about two-thirds of the 450 W. 42nd St. apartment’s $9,000-plus market price, or $6,670 a month, because it was rent stabilized.

He then listed it online for $649 a night.


According to a standard landlord's rule of thumb, a person can afford a rent of no more than one-third of their monthly income. So, at a rent of $6,670 a month, you need to make at least $240,000 per year to rent this rent stabilized apartment.

Stepping back from the immediate issue of making a profit from government regulatory largesse, perhaps we should look at the larger question: Why do rich people deserve rent stabilization?

Amexpat said...

Airbnb is not the culprit here. The tenants renting out their rent control apartments know the rules.

Bryan C said...

Rent control is stupid. But how could it be Airbnb's job to inform people of the terms of their lease agreements? That task falls to the landlords.

And if landlords don't enjoy policing their tenants for laws that can causally criminalize "almost all NYC residents" then it's up to them to get the city to change the laws so they don't have to do that anymore.

MadisonMan said...

The real culprit here is Airbnb, which makes millions by encouraging New Yorkers to violate their leases without even informing them of the risk

Assumption: New Yorkers are idiots who don't bother to read the leases they are signing.

At least the Government is here, and it's here to help those poor unfortunates being taken advantage of by Airbnb. Or it's helping the landlords. Either way, it's surely helping because, you know, it's the Government!

Todd said...

"The real culprit here is Airbnb..."

Right, because they hold guns to the heads of tenants and force them to list on the service.

Individuals are responsible for NOTHING any more, businesses are responsible for EVERYTHING!

Unless you are a man, then you are a rapist but that is all you are responsible for but that is another thread...

Alexander said...

I've thought about it and I have concluded that rent control in NYC is one of the few times it makes sense:

Anything that encourages people from New York City staying in New York City and not being forced to find cheaper accommodations elsewhere is a boon for everyone who doesn't live in New York City.

Not it's certainly not a model for the economy elsewhere. Certain places - Boston, Chicago, San Francisco - may also benefit from a 'we'll do anything to make sure you don't leave' population policy, but we don't want it to be a national crutch.

Though that being said, I understand that longtime citizens of Colorado and Oregon wish we'd been a little more on-the-ball of getting the pilot program expanded to the west coast. And from my interactions in Atlanta with some new-found friends who all seem to come from Chicago, I admit to being susceptible to the notion of a cureall myself.

Anonymous said...

Seems like a desperate attempt to place the blame where there will be little sympathy.

One has to assume New Yorkers are all idiots for this to be the businesses fault.

MadisonMan said...

State Senator Liz Krueger is responsible for the quote.

I wonder why her party affiliation is missing from the article.

Michael K said...

When I was visiting Austria about 15 years ago, I had a driver who had an apartment across from St Stephens cathedral in Vienna. Obviously, this was prime real estate. It was rent controlled and he had "inherited" it from his parents. He spent the winters in Argentina as he did not like Vienna winters. Obviously he had not yet heard of Airbnb, which lay in the future. Rent control is not unique to New York or Santa Monica, for that matter.

Achilles said...

Once again the people who abuse their monopoly on force see no difference between people forced into rent control schemes and two people who make an agreement together willingly.

And as a landlord my guess is unless the tenant is tearing the place up the land lords there could give 2 shits what the tenant does. So was it a hotel chain writing this article?

Expat(ish) said...

@Achilles - well, landlords do and don't care. The other tenants do not like this stuff mostly.
1> strangers wandering around the halls
2> overnighters have less pressure to be good neighbors so noise, etc

Now, to the extent that the landlord cares or can be made miserable by other tenants, some of whom may not be rent controlled and therefore more "important" you can see the push.

_XC

Scott said...

Let's get the terminology right. Rent control in NYC is just about gone. We're talking about rent stabilization.

As for the benefit of keeping New Yorkers in NYC through rent stabilization, well, I just don't see how America is a better place because we infantilize rich people by allowing them below market rents. If they can't afford the Big Apple, they should move back to Syracuse, or wherever.

MadisonMan said...

Per the article, Achilles, "Neighbors were complaining" -- at least, that's what the Landlord's Lawyer says. And Strangers were coming and going! The lawyer said it: it must be true!

And "sources" say he lives in Queens.

Jane the Actuary said...

Achilles, I think in this case, landlords care because, if they can evict the guy for cause, they can bring in a new tenant at a higher rate, if I understand the system correctly.

tim maguire said...

Renting out apartments for short periods has been a practice among NYC tenants for...a long time. It was not invented by Airbnb and the people doing it know exactly how their lease treats the practice.

tim maguire said...

Scott said...According to a standard landlord's rule of thumb, a person can afford a rent of no more than one-third of their monthly income. So, at a rent of $6,670 a month, you need to make at least $240,000 per year to rent this rent stabilized apartment.

That doesn't make sense. Rent stabilization laws do not apply to apartments over $2,500 per month.

But on another note, it's common in NYC for people to spend over 50% of their take-home on rent. Not to say that this guy isn't plenty well off, but he need not be that well off.

tim maguire said...

Expat(ish) said...
@Achilles - well, landlords do and don't care. The other tenants do not like this stuff mostly.



Landlords care--those lower rents come right out of their pockets. That apartment is their investment and the government forces them to make a lower return that they otherwise might, and then a tenant, who has made no investment, who has taken no risks, gets to step in and make that money that is denied to them.

Yeah, they care.

B said...

I hope they evict a lot of those locked into decades old leases at $200/month. Free up new market rate units.

Peter said...

"Ikezi’s neighbors complained about loud parties"

The real culprit here is Ikezi, for failing to talk with and be considerate of his neighbors. I doubt they'd have cared what he did with his apartment, so long as his activities didn't create a nuisance; why would they?

So the neighbors went to the landlord, who then used NYC's rent stabilization code to get him evicted. Not nice, but I bet they don't feel too bad about having done it.

Michael said...

The real culprit is not Airbnb but the people who violate their leases.

alan markus said...

That doesn't make sense. Rent stabilization laws do not apply to apartments over $2,500 per month.

According to the article, it is a "421-a" project. That is some kind of scheme where the developer gets a certain amount of property tax abatement that is used to reduce the rents. That being said, you might think the City of New York would have an interest in recovering the tax revenue that is being forgone in the interest of affordability.

SJ said...

I was kind of under the impression that rental/lease contracts typically don't allow subletting.

It's not unique to NYC, nor to rent-stabilized apartments.

(Though the situation of a landlord in the cases of rent-stabilized apartments in NYC definitely raise the odds that AirBNB will be noticed and cause trouble in those cases...)

I might be wrong. I'm just a homeowner, and I don't recall whether subletting was part of the rental contract when I rented a room while a student.

retired said...

White Peoples' Problems

Bryan C said...

"and then a tenant, who has made no investment, who has taken no risks, gets to step in and make that money that is denied to them."

The problem isn't that the tenant is making money, it's that the landlord is being prevented from making money.

I can see why a landlord might be unhappy with the law, but a "misery loves company" approach doesn't improve the situation for either the landlord or for the tenant.

Drago said...

Michael: "With very few exceptions, none of which come to mind, rent control/stabilization is always and everywhere a bad idea."

That's because you are not operating under the same "success" metrics as the lefties.

The only question you need to ask is: Does this rule/policy increase the scope and/or power of government?

If the answer is "yes", the left is 99.99% of the time for it.

Any other questions are irrelevant and probably racist.

Wally Kalbacken said...

MadisonMan said...
The real culprit here is Airbnb, which makes millions by encouraging New Yorkers to violate their leases without even informing them of the risk

Assumption: New Yorkers are idiots who don't bother to read the leases they are signing.



My favorite is a remark in a contract case decision by the Supreme Court of GA, to wit: "Those with the ability to read have the duty to read."

Michael K said...

""Those with the ability to read have the duty to read."

Racist !

Robert Cook said...

"But how could it be Airbnb's job to inform people of the terms of their lease agreements? That task falls to the landlords."

No, it falls to the tenants, who have copies of their leases and are expected to know and abide by their lease provisions.

Robert Cook said...

"Once again the people who abuse their monopoly on force see no difference between people forced into rent control schemes and two people who make an agreement together willingly.

"Forced into rent control schemes?" What?

"And as a landlord my guess is unless the tenant is tearing the place up the land lords there could give 2 shits what the tenant does. So was it a hotel chain writing this article?"

The landlords do give a shit about what tenants do, as, for example, when tenants damage the physical property, or when tenants rent out their apartments without landlord approval (i.e., a formal sub-let), and for more money than the leaseholder is paying to the landlord.

Also, forget the landlords: other tenants care about this. Who wants to live in a residential building where the apartment next door is being used as a hotel room, with unknown parties having access to the building, coming and going willy-nilly, creating messes, noise, etc.?

Robert Cook said...

"Renting out apartments for short periods has been a practice among NYC tenants for...a long time. It was not invented by Airbnb and the people doing it know exactly how their lease treats the practice."

It's called sub-letting, and the leaseholder must obtain landlord approval. There are also limits to how often and for how long one may sub-let one's apartment. The leaseholder may not sub-let the apartment for more money than what he pays his landlord as stipulated in the lease.

Left Bank of the Charles said...

If, as the article suggests, the guy was living in Queens and keeping the rent-controlled apartment to sublet on a nightly basis, there was really no risk for him.

Sure, he lost the apartment, but he really had no need for it, except to illegally sublet.

Robert Cook said...

"That doesn't make sense. Rent stabilization laws do not apply to apartments over $2,500 per month."

Actually, they do, if the apartment has been rent stabilized.

For a rent stabilized apartment to become deregulated, it is not enough for the rent to reach $2,500.00 per month. The tenant(s) must also have a total annual household income exceeding $200,000.00 for at least two calendar years.

Robert Cook said...

"If, as the article suggests, the guy was living in Queens and keeping the rent-controlled apartment to sublet on a nightly basis, there was really no risk for him."

Legally, a rent-regulated apartment must be the primary residence of the lease-holder. The lease-holder must physically reside in the apartment for a minimum amount of time each year. (I believe it's at least half the year, but it may be more.)

Robert Cook said...

"I hope they evict a lot of those locked into decades old leases at $200/month."

There aren't many of those left.

Todd said...

If the apartment were not price controlled, I would be more incline to side with the tenant but since the apartment IS price controlled, the tenant by "sub-letting" on a frequent basis is potentially earning in excess of the amount they are being charged for rent and as such are earning off of an unfair situation. As others have noted, this sort of thing also affects the "quality of life" of the other tenants in that they are affected by the behavior of the transient occupants.

I am not in favor of price controls of any kind but as those are the rules in place there, the tenant has an obligation to follow them.

damikesc said...

They could just end the terrible idea that is rent stabilization.

If you want to price your place of residence of choice outside of your income, then perhaps you've learned a valuable lesson.

Big Mike said...

I agree with Nonapod and with Scott. I think rent control is always a bad idea, but a certain type of politician assumes that government intervention is always the first, best choice for fixing problems. In the end they only make things worse, but they never learn.

Airbnb's lawyers should have included a disclaimer about people needing to conform to their local laws for subletting. I'm surprised if they don't.

Gabriel said...

You know what this reminds me of?

The Russian peasant who discovered an old lamp, and in the lamp was a genie, who offered him one wish, but his neighbor would get double. And so he wished to lose one eye...

damikesc said...

Only thing worse than meddling pols are environmentalists who won't permit a city to actually build more housing --- and then notice that housing prices are pretty damned high.

As has been said elsewhere, San Francisco is little more than a gated community at this point. And who can actually LIVE in Manhattan besides the psychotically rich who, sure as shit, don't want you plebes near them?

WisRich said...

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Revenant said...

I have mixed feelings about this.

New York laws make it an unending agony for landlords to evict people who violate their leases. In a more sensible city this situation would resolve itself: "Oh, you're subletting your apartment? Be out by the end of the month, then, we're terminating your lease for violating the agreement."

In New York, the landlord's going to be up to his neck in legal fees and headaches. That's why so many people are willing to openly violate the contracts they signed -- they know that as long as the AirBnB tenants aren't TOO obnoxious, most landlords will grit their teeth and tolerate it.

Xmas said...

Revenant,

I'm wondering if NYC AirBnB people would have the same problems as San Francisco AirBnB people. People have let AirBnB people into their apartments only to have those renters use the city's pro-renter laws to literally swipe the apartment, squatting there for months while the original renter has to go through eviction proceedings.

Robert Cook said...

"If you want to price your place of residence of choice outside of your income, then perhaps you've learned a valuable lesson."

What does this mean?

Robert Cook said...

"As has been said elsewhere, San Francisco is little more than a gated community at this point. And who can actually LIVE in Manhattan besides the psychotically rich who, sure as shit, don't want you plebes near them?"

There are plenty of people living in Manhattan who are NOT "psychotically rich," (or even just "plain" rich), and rent regulation laws is among the reasons this is still so.

Robert Cook said...

"New York laws make it an unending agony for landlords to evict people who violate their leases."

The laws also protect tenants--to a point--from predatory landlords who try to evict law-abiding, responsible tenants (who are maintaining the terms of their leases and paying their rents) in order to jack up the rents for new tenants.

MadisonMan said...

People have let AirBnB people into their apartments only to have those renters use the city's pro-renter laws to literally swipe the apartment, squatting there for months while the original renter has to go through eviction proceedings.

I've read of this happening only once -- in San Diego. If you rent to someone in CA for 30 days (I think that's the time frame), then they are technically renters and eviction is required.

So: Don't airbnb for more than a week or 2. My vague recollection is that Airbnb was helping the owner in the case.

Had I time, I'd find a link.

Revenant said...

The laws also protect tenants--to a point--from predatory landlords who try to evict law-abiding, responsible tenants (who are maintaining the terms of their leases and paying their rents) in order to jack up the rents for new tenants.

How horrifying -- property owners actually renting their property for the price *they* want to charge??? Thank goodness New Yorkers can be "protected" from people exercising their basic human rights.

Strange that most of the rest of the nation manages to get by just fine without being protected from human rights.

J Lee said...

If IKezi is paying $6,670 a month for his rent-stabilized apartment, that means he's spending $79,000 a year on rent before he's eaten his first meal on January 1 of the year. And unless the million-dollar house in Queens is free and clear of a mortgage (before we even get into property taxes and other possible utility or maintenance charges), you're pretty close to six-figures already just on housing.

New York's housing market has been screwed up since the rent control/rent stabilization rules were put in after World War II. But at the same time, that doesn't give someone the right to live beyond their means with two NYC homes, one being taxpayer-subsidized, and then trying to make ends meet even with the subsidy by using AirBNB as a secondary income source.

gadfly said...

Mind blowing stuff. $9,000 per month apartments with rent control! Wait. Perhaps $9,000 apartments exist because of rent control.

If rent control causes housing shortages as some economists believe, then base rents spiral upward with demand. Following behind at a distance are the the discounted rents imposed by socialists.

God is watching us
God is watching us
God is watching us
From a distance

damikesc said...

What does this mean?

Really not that complicated. I'm not sure how you can possibly NOT comprehend it.

The laws also protect tenants--to a point--from predatory landlords who try to evict law-abiding, responsible tenants (who are maintaining the terms of their leases and paying their rents) in order to jack up the rents for new tenants.

They can always move if rent is too high.

Oh wait --- it's NY. They can't AFFORD to move elsewhere unless the government forces others to pay for their "stabilization".

Know what would lower rent?

BUILDING MORE HOUSING.

Works quite well. But Progressives hate the idea of that.

That's why SF is a gated community.

And nobody who isn't psychotically rich can afford to live in Manhattan.

EMD said...

Renting out apartments for short periods has been a practice among NYC tenants for...a long time. It was not invented by Airbnb and the people doing it know exactly how their lease treats the practice.

Yeah, has no one ever seen "The Goodbye Girl" for crying outside?

Chris N said...

The Red Pirate Cook hasn't met a top-down, utopian plan for equality he hasn't liked.

See you out on the socialist seas, Captain.

Achilles said...

Robert Cook said...
"As has been said elsewhere, San Francisco is little more than a gated community at this point. And who can actually LIVE in Manhattan besides the psychotically rich who, sure as shit, don't want you plebes near them?"

"There are plenty of people living in Manhattan who are NOT "psychotically rich," (or even just "plain" rich), and rent regulation laws is among the reasons this is still so."

Because the rents are determined by neighborhood. Amazing how progressives are so attached to segregation. And notice how segregation flourishes where government steps in. Happened when progressive democrats in the south targeted blacks. We now have a public education system that is perfectly segregated by socioeconomic status thanks to progressives. And in places like NYC where progressives are in complete control they segregate rich from poor with rent control.

Democrats/progressives use government control to push their need to separate themselves from the plebes. It is the obvious outcome from rent control and yet Cooke is tying himself in knots trying to defend segregation.

Sad. I don't think RC actually supports segregation. He is just too dumb to figure out what the progressive movement is all about. On the other hand he wants to throw me and my friends in jail for being mean to Iraqi's so he has that capacity for mendacity.

The Godfather said...

The other important city with rent control is Washington, DC. Since the adoption of DC rent control in 1974, rent control has been a major part of my law practice. All the bad things that sensible people believe about rent control are true.

A difference between DC and NYC seems to be that "market" rents in NYC, because of limits on new construction, cannot be afforded by anyone other than the super rich, and drug dealers. In DC, there's been enough new construction (exempt from rent control) and restoration of decayed buildings (possibly exempt from rent control), coupled with a lot of growth in the suburbs, that regular folks can live in some parts of DC even at market rents. This means that some new housing is being built in DC, although not as much as there would be if there were no rent control.

From Inwood said...

for years, I've bored people with my NYC Rent Control/Stabilization stories.

People like Alistair Cooke with an apt overlooking Central Park. People like the 3d generation Jung of shrink fame moving back to the Central Pk apt apt after having been a SF Hippie, & Tenants of Stuy Town summering in The Hamptons while subleasing their apt @ 3X the rent to law students with jobs at Wall St Firms.

Yet if you talk to the Social Justice Warriors, you get a different picture: The widow with 5 kids & no job....


Robert Cook said...

"How horrifying -- property owners actually renting their property for the price *they* want to charge??? Thank goodness New Yorkers can be 'protected' from people exercising their basic human rights."

That's called violation of contract, bub. We're not talking about landlords pricing vacant apartments at prices they believe the market will bear, but landlords trying to push people out of apartments they're already occupying--for which they have signed leases with legally agreed upon rent prices--using tactics as "minimal" as not providing heat or hot water in winter and refusing to make repairs, (which can be pretty miserable and even dangerous in winter weather)--all in violation of the law--up to hiring thugs to come in and menace the tenants in their buildings.

Robert Cook said...

"Really not that complicated. I'm not sure how you can possibly NOT comprehend it."

Perhaps because it is so poorly phrased that whatever meaning it is meant to convey is...not!

Robert Cook said...

"They can always move if rent is too high."

Ummm...where? Move where? Do you mean...leave the geographical area entirely?

This would involve finding a new job elsewhere, hopefully comparable to the one one already has--not in the least a sure or even achievable thing in today's America--and coming up with financial resources to pay for the move that, ahem, many people do not have.

Robert Cook said...

"Know what would lower rent?

"BUILDING MORE HOUSING.

"Works quite well. But Progressives hate the idea of that."


Not at all. Housing advocates want more housing to be built. However, given the geographical limits of building in NYC, the only housing that is built is intended from the start to be high-priced "luxury" housing for...the psychotically rich! Affordable housing is not being built.

"And nobody who isn't psychotically rich can afford to live in Manhattan."

Spoken like someone who knows nothing about who lives in Manhattan. It would be true...IF all rent regulation laws were repealed, and even with them, it is becoming harder to people who are not rich to live here. But there are still many non-rich people remaining who live in Manhattan...due in large part to the rent regulation laws. (The problem of affordable living in New York is not limited to Manhattan, but is increasingly becoming a problem in all the boroughs.)

Robert Cook said...

"On the other hand he wants to throw me and my friends in jail for being mean to Iraqis...."

Who, you? The soldiers? No, not unless you killed innocent civilians on purpose, which, of course, is criminal, even in war. You and your friends were just meat-puppets sent by government to do its dirty work. You're the ones who must kill and be killed. The criminals are the "leaders," the "commander in chief," the generals in the Pentagon...all those who have planned and implemented their illegal wars, yet who will dress in fine clothes and eat fine meals and be accorded respect, even deference, and who will never face the bloody reality they have created.

cubanbob said...

"They can always move if rent is too high."

Ummm...where? Move where? Do you mean...leave the geographical area entirely?

This would involve finding a new job elsewhere, hopefully comparable to the one one already has--not in the least a sure or even achievable thing in today's America--and coming up with financial resources to pay for the move that, ahem, many people do not have."

Everyone else owes you a living. Got it. Incidentally leases have termination dates. When the lease is up, it's up. Can't afford the new rent, move.