The new law fines hosts for advertising entire homes as short-term rentals.

New York City
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New York legislators are getting tough with Airbnb. A bill on its way to Gov. Andrew Cuomo will add teeth to the law that makes most of the service’s listings in the city illegal.

For about as long as Airbnb has been around — and before it became extremely popular — New York state has had a law on the books regulating short-term rentals. What it boils down to is that entire apartments or homes, in buildings of three units or more, cannot be rented out for fewer than 29 days.

That’s right. If you’ve recently stayed in an Airbnb in New York City, it was most likely illegal.

The law is intended to prevent illegal hotels, particularly in areas (like New York City), where there is a limited supply of affordable housing. Short-term rentals can incentivize landlords to choose tourists over residents and introduce transitory visitors in residential neighborhoods. Because of the 2010 law, about 52 percent of Airbnb’s more than 36,000 listings in New York City are illegal. (The number of listings is an estimate by an independent analyst.) Several local politicians, including New York State Assemblymember Linda B. Rosenthal and New York City Councilmembers Jumaane Williams and Helen Rosenthal, have spent recent years battling Airbnb.

The law, while clear about what is not allowed, has not been easy to enforce. And so a bill that would fine people for advertising rentals of entire homes for less than 30 days passed in both houses of New York state’s legislature on Friday, and is now headed to Cuomo’s desk.

For the first violation, offenders would be fined $1,000, then $5,000 for the second and $7,500 for the third, according to Gothamist.

“This bill will clarify that if you engage in such renting, there will be stiff penalties,” said Assemblymember Rosenthal, who co-sponsored the new legislation along with State Senator Andrew Lanza.

“Airbnb facilitates 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 and negatively impact the residential real estate market by driving up rent and diminishing housing supply,” said Vijay Dandapani, the chairman of the Hotel Association of New York City, in a statement. “This smart and innovative legislation will allow law enforcement agencies to better target, track, and penalize lawbreakers, while also protecting one of New York’s most vital economic contributors — the hotel and hospitality industry.”

In response, Airbnb released a statement summarizing their analysis of the potential effects of the proposed fines. The company also doubled down on the idea that hosts use the money they get from renting out their homes to be able to afford them.

According to Airbnb, more than 21,000 people hosting on the platform would be unable to pay even $1,000, “increasing the risk they would enter bankruptcy or lose their home.”

“These figures suggest the bill could exacerbate the affordable housing crisis,” said Airbnb Head of Public Policy in New York City, Josh Meltzer, “not only by dissuading New Yorkers from sharing their homes in order to afford rising rents, but also by imposing significant fines that could put tens of thousands of New Yorkers at risk of entering bankruptcy or losing their home.”

What is unclear about Airbnb’s argument, though, is how it is possible the service is enabling hosts who are renting out their entire homes to stay in them.

A spokesperson for Cuomo told the Wall Street Journal the governor would review the legislation.

Correction: This story has been updated to reflect that the law regulating rentals of entire homes applies to multiple dwellings, including buildings of three units or more.