What's the Big?
July 24, 2010
It must get really boring up in Albany this time of year. Nowhere to swim, nowhere to eat. Just a lot of concrete. To make the time pass a little more quickly, one favorite pastime appears to be thinking up laws to drive folks in New York City completely nuts. One piece of legislation that illustrates that point, is the ban on short term rentals of less than thirty days, recently passed by the New York State Assembly and Senate and signed into law by Governor Paterson yesterday.
July 23, 2010: A Day that Will Live In Co-op and Condo Infamy…Or Maybe Not
As Frank Lovece points out in his July 14, 2010 Habitat Magazine article in opposition to the proposed New York State ban on rentals, State Senator Liz Krueger, a sponsor of the bill, thought the ban would be a good idea in all multiple dwellings in New York, which would include co-ops and condos. The primary targets of the bill are those classic New York reptilian landlords who convert their rental housing stock into illegal hotels, jamming tourists into bunk beds along with the bedbugs. Caught in the crossfire of the new legislation, are co-op and condo boards that will no longer have the right to allow short term rentals. But now that the legislation has been signed into law, is it really a big deal for co-ops and condos?
First, Some Background
Almost all residential rental leases, both regulated and free market, prohibit the tenant from subleasing his or her apartment or assigning the lease without the prior consent of the landlord. At least in theory, short term rentals are not permitted without prior approval. A condo owner usually has the right to rent his or her apartment, but the vast majority of condos require the lease to be for a duration of more than thirty days and usually no less than twelve months. Co-ops are even more restrictive. Many co-ops prohibit subletting completely and some only allow subletting for a limited period of time and for specific reasons (such as taking a job out of town or financial hardship). In my experience, there are very few co-ops or condos that permit or encourage short term leasing of any kind. So, although the statute would remove the right of co-op and condo boards to allow short term rentals, the enactment of the law will have a negligible impact on day-to-day life in the average co-op or condo.
It’s Easier in Barcelona
Ironically, and just to ratchet up the frustration, a piece by Benji Layado in the Sunday New York Times Travel section on July 18, 2010, entitled “Europe Without Hotels”, sings the praises of “a new breed of website”, that locates apartments and "spare rooms" for travelers all over Europe, at a deep discount from hotels. And it’s not just overseas. As the article points out, there are over 3,500 short term rentals available online in New York State alone. Taking the cost of a hotel in Manhattan into consideration, the concept of staying in a one-bedroom co-op or condo in Tribeca for a fraction of the cost of a hotel, seems like a win-win situation for both the apartment owner and the tourist. But then again, there are risks.
Short Term Rentals are Actually a Bad Idea
Having lived in a co-op where a few of the residents used their apartments as bed and breakfast accommodations (with tourists often speaking Danish in the lobby, as opposed to eating one), my own anecdotal conclusion is that nothing good can come from giving strangers access to your apartment and to your building without the knowledge and consent of co-op or condo management and appropriate vetting of the proposed tenant. Particularly in New York, a target of mayhem all too often, health and safety concerns far outweigh the economic benefits to the few individuals who are leasing out their apartments on a short-term basis to make a few bucks. When you look at the risk and reward, the answer in my view is obvious.
But Would the Statute Really Change Anything?
Since short-term rentals are already contractually prohibited in most leasing situations, making the practice “illegal” really won’t change things for co-ops and condos. Most apartment owners would never consider renting out their spaces short-term in the first place, and those individuals who are currently doing so in violation of the co-op or condo governing documents, will probably continue the practice unabated now that the ban is official. In any event, as Senator Krueger is quoted as saying in Lovece’s article, “The city is not going to knock on doors.” So what’s the big?
Residential Reality: Albany Has a Disconnect with Ownership Housing Stock
It doesn’t seem like Albany understands how co-ops and condos actually operate in New York City. Excluding co-ops and condos from the prohibition, just as brownstones are excluded, would have made much more sense since there are already many layers of review and approval required before an apartment owner can sublet or rent his or her co-op or condo. With all the tax dollars that go upstate, it might be nice if a little more deliberation went into legislation that will no doubt make life in Gotham that much more annoying. With the enactment of the short term rental ban, it appears that Governor Paterson has decided to continue a trend that evidences a legislative indifference to the thousands of New Yorkers who live in co-ops and condos.