Page last updated at 15:23 GMT, Friday, 25 February 2011

New York cracks down on illegal hotels

By Carmen Roberts
Reporter, BBC Fast Track

A low budget hotel in New York
Moderately priced hotels for travellers on a budget are scarce in New York

A new law which will make it illegal to rent an apartment in New York for fewer than 30 days could make it harder for tourists to find affordable accommodation.

Hotel rates in New York City are the highest in the US and among the most expensive in the world, with an average hotel room in 2010 costing $255 (£157) a night. And rates are likely to rise by around 7-8% in 2011.

A growing number of unscrupulous landlords have been taking advantage of this and turning residential apartments into cheap hotel rooms.

'Forced out'

It is estimated that 200 to 300 buildings across New York, which are specifically designated for single room occupancy, are being rented out on a nightly basis.

The new law is an attempt to stop landlords from doing this without city permission, but the wording of the bill leaves open the possibility that tenants who sublet their apartments for short periods while they are on holiday could technically be breaking the law as well.

Yarrow Willman-Cole
If it's being described as a boutique hostel or boutique hotel, and you're spending $20 to $40 then it's very likely that it's an illegal hotel
Yarrow Willman-Cole

Yarrow Willman-Cole, a tenant organiser at the Goddard Riverside Community Centre, said the bill was drafted because tenants complained they were being forced out of the affordable rental market.

"These illegal hotels create this incentive for landlords to evict tenants and the fact is that we have a limited amount of affordable housing and it's a great risk when you take these buildings off the housing market."

Senator Liz Krueger, one of the driving forces behind the bill, said it would ensure residents "no longer see their apartments overrun by transient tourists - and visitors will no longer have to worry about arriving to find that their 'hotel' is actually an apartment building".

Residents 'abused'

Katie Kincaid, Senator Krueger's communications director, stressed that the law was aimed at landlords who converted private flats into commercial spaces without permission, sometimes in violation of building codes.

Vivian Riffelmacher
Vivian Riffelmacher lived in the same building as an illegal hotel

Vivian Riffelmacher used to live in a building on the Upper West Side, but in 2004 it was partially converted into a hostel.

"Basically you were made to feel unwelcome and they would abuse some of the tenants - physical, verbal and psychological abuse. I saw people being screamed at and people behind the desk refusing to give them their mail.

"Suddenly you had traffic in the building, incredible crowds of people coming in.

"One woman lived in the same hallway as a youth hostel and a room that was meant for two people, but there were 21 men from a Middle Eastern country there the weekend that it opened."

Yarrow Willman-Cole said tourists could avoid booking an illegal establishment online by assessing its description and cost.

"If it's being described as a boutique hostel or boutique hotel, and you're spending $20 to $40 then it's very likely that it's an illegal hotel.

"Look at the reviews on the websites, and you might see negative reviews about capacity, and being unable to book guests properly."

Page from an internet booking site
The subletting bill blames the internet for the rise of illegal hotels

David G Allan, editor of said the bill was bad news for the budget-conscious traveller.

"If you don't have $500 (£309) for a weekend in New York, then you might not come here and that is not necessarily great for the city.

"It may be good news for the hotels - but [tourists] are spending money in the city and so we lose that money."

Major hotel booking website, Expedia, has been lobbying against the law in its current form, as it wants to see a range of accommodation choices in the city.

Expedia's director of market management for New York, Nick Graham said: "We are looking for a variety of supply for our customers so when we look at the buildings available currently, we feel this gives our customers a broad spectrum of choices in New York and we would like to keep it that way."

It's a hard thing to police and we'll have to see what the effect is on the city
David G Allan editor

As it stands it will still be legal to rent a spare room in a residential apartment, as long as the owner is still resident.

And if an apartment booking for a couple of days is made on a reputable site like Crashpadder or AirBnB technically the landlord will be breaking the law, not the visitor.

"The law really clarifies the legal use of the building from the point of view of deciding who is staying in the building, so that's the owner, operator or lessee of a building - those are the folks who are going to be fined for operating an illegal hotel - not the individual," said Yarrow Willman-Cole.

Stephen Rapoport, founder and managing director of, a website advertising short-term stays, said the legislation was unlikely to affect businesses like his.

"As far as I'm aware the city is not pro-actively enforcing the legislation - but relying on neighbours to make a complaint, and we've never had a single complaint from the neighbour of a Crashpadder host," he said.

Other cities in the US, like Maui and Chicago, have introduced similar laws, while areas in California and Texas are tipped to follow. Further afield, officials in Paris are also trying to crack down on short-term apartment rentals.

David G Allan is worried that the law is "so far sweeping that it affects people who do it to supplant a little extra income and that's actually bad news for locals who do this to try and pay off their mortgage".

"It's complicated and it's a hard thing to police and we'll have to see what the effect is on the city."

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