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Micro-Subletting Is Thriving In New York—But Is It Legal?


NYC apartment

Micro-subletting is a pretty good business in New York these days. As the New York Post recently reported, residents throughout the city are "bringing in tens of thousands of dollars" renting out their units or spare rooms for days or weeks at a time.

Carol Williams of the East Village made $18,000 in 10 months. Mikey Rox of Harlem pulled in $75,000 over three years. Seth Porges has made $60,000 over two years and published tips for how others can do the same.

The only problem with the scheme — at least in some cases — is that it's illegal. A 2010 state law, implemented in May 2011, prevents someone from occupying a Class A dwelling for fewer than 30 days. Though the primary targets of the law were illegal hotels run by building owners, the provision extends to people living in residential apartment units as well.

There are two major exceptions to the 30-day restriction. One says that residents are free to sublet a room of an apartment so long as they continue to live in it with the guests. Another says that guests may sublet a whole unit for fewer than 30 days "provided that there is no monetary compensation paid to the permanent occupants." Neither seems very attractive to prospective micro-subletters. The former makes for some potentially uncomfortable encounters; the latter, a pretty poor business model.

Which may be why some micro-subletters aren't paying the 2010 law much mind. The New York Times recently reported that a proliferation of short-term renters has become a point of contention in Stuyvesant Town, a private residential community in the East Village. While younger residents enjoy the extra income, older residents see an abundance of negative consequences: from bed bugs to security risks to noise problems.

A general lack of enforcement by the city has made the feud more intense. A few long-time Stuy Town residents have turned into "amateur sleuths" who patrol short-term rental sites, such as Airbnb, in attempt to catch micro-subletters before they strike deals, according to theTimes. Management also claims to be monitoring the problem, saying they've sent "cease-and-desist letters to 50 tenants" since last summer.

Getting the attention of city authorities may be especially difficult if it turns out they're among the offenders. The neighborhood blog EV Grieve found a short-term rental listing at 18th St and 1st Avenue, right in the Stuy Town vicinity, posted by a self-described "Police Officer from New York."

"If it is in fact true a member of the NYPD is listing his apartment as a short-term rental, this will only fuel the Airbnb controversy," writes Grieve. (It's not clear whether the lister is renting just a room, which wouldn't violate the 2010 law if he stays there too, or his entire unit.)

That's not to say the city's doing nothing. As of April it had issued roughly 1,900 violations of the new law, according to another recent Times piece. Still sites like Airbnb (as well as small bed-and-breakfasts throughout the city) feel they're the unintended victims of legislation primarily meant to prevent residential buildings from becoming illegal hotels. An Airbnb spokesperson told Atlantic Cities that New York City residents who use the site to "help make ends meet" shouldn't be the focus of the law:

Our hosts have used the additional income they earn through Airbnb to help pay their rent, make their mortgage payments, and avoid foreclosure and bankruptcy. Airbnb not only helps New York City residents afford to live in one of the most expensive cities in the world, travel facilitated by Airbnb also spurs economic development in New York City's local neighborhoods. Airbnb travelers spend money at local businesses throughout the five boroughs, providing many neighborhoods with access to the city's strongest economic driver — tourism.

Some state lawmakers see their point. A clarification of the 2010 law, currently under consideration by Albany, would separate the "legitimate business model" of mirco-subletting from illegal hoteliers and the numerous maintenance, safety, and health-code problems they create. A memo for the amended bill, which is being sponsored by State Senator Martin Golden, says the new legislation "would help those individuals and small businesses that will no longer be able to operate because of this law."

Operate legally, that is.

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