A New York City Airbnb host was shut down under the short-term rental law. He's now renting his basement illegally on Facebook and making crucial income after he was laid off.

• A New Yorker's Airbnb business thrived until a new city law shut it down.
• NYC moved to restrict short-term rentals, in part to address the city's housing shortage.
• The former host now rents his basement through Facebook and friends, earning income after a layoff.

After Paul and his wife bought their townhouse in Astoria, Queens, in 2013, they decided to transform their basement into a guest suite for visiting family and friends.

To help pay off the loan they took out for the renovation, the couple rented their basement — which has a bedroom, living space, and a kitchenette — on Airbnb for short-term stays in between family visits. They were quickly inundated with eager guests. There aren't many hotels in Astoria — a largely residential neighborhood — and the few that exist are "dinky" and expensive, Paul said.

Fast-forward several years and the couple is still renting out the basement for short periods. But they're knowingly violating New York City's new law banning most short-term rentals.

Through Airbnb, they hosted tourists from across Asia, Europe, and the US, as well as people visiting family members in Queens. Guests usually stayed about three or four days, but sometimes as long as two weeks.

"It turned out to be enormously profitable," said Paul, whose name was changed for this story to protect his family's anonymity.

In the high season, he said they charged up to $300 a night for the space, which can comfortably sleep four, and they never charged less than $150 a night. In a good month, it brought in nearly $3,000, according to their Airbnb earnings report. But when the pandemic hit in early 2020, they were forced to shut down their Airbnb business. Because the basement doesn't have a proper kitchen, including an oven, they couldn't rent it out long-term.

A couple of years later, they were just about to re-list their basement on Airbnb when the New York City government passed new regulations — known as Local Law 18 — cracking down on short-term rentals.

Under the law, homeowners can host paying guests for less than 30 days only if their unit is in an approved building, they rent to a maximum of two guests at a time, and they stay in the home with their guests. The law also requires that guests have access to the entire unit and that there aren't any locked doors inside the home. Every potential host has to apply and be approved by the city's Office of Special Enforcement (OSE). Hosts can be fined up to $5,000 for repeated violations.

Paul and his wife applied, but they were denied, according to documentation viewed by Business Insider. To comply with the law, they would need to open up their personal living room and kitchen to their Airbnb guests. An OSE representative helpfully explained how they could alter their home to comply with the law, but Paul and his wife felt the changes would "sacrifice our own sense of privacy," so they gave up on Airbnb.

Since the city began enforcing LL18 last September, the number of short-term rental listings has plummeted. Airbnb listings for stays of less than 30 days fell from 22,246 in August of last year, just before the city began enforcing the law, to nearly 4,000 in May 2024, a roughly 82% drop.

As of June 24, the city had received 6,395 applications for short-term rentals, according to OSE. The office has approved 2,276 of these, denied 1,746, and asked 2,269 applicants to submit additional information.

LL18 aims to address the city's severe housing shortage by opening homes to long-term renters that were previously reserved for visitors. Some evidence, including from Irvine, California, suggests that restricting short-term rentals can reduce rents. Less than a year into enforcement of the near-ban, it's not clear whether New York City is achieving this goal, but it has made hotel rooms more expensive.

Crucial income after a layoff

After the city rejected his application, Paul says he was "pissed off" and decided to find other ways to rent the basement out to short-term guests. So he began promoting it in various Facebook groups and through friends in the neighborhood. He quickly found takers.

With so many former Airbnbs gone and hotel rates on the rise, business has been good. For the last about 18 months, he's managed to regularly rent the place out for short-term and medium-term stays, charging between $150 and $200 per night or $2,500 for a month-long stay.

He's not particularly worried about being fined by the city because he thinks the government is more concerned with shutting down large-scale, short-term rental businesses rather than small-time property owners. OSE told BI it's working with Airbnb and other short-term rental companies to ensure they're in compliance before it begins fining hosts who violate the rules.

Right now, Paul is hosting a local family waiting for renovations to be finished on their new home in the neighborhood. And they have lots of regular, repeat guests — mostly grandparents visiting from out of town and others who want to stay near family who live in Astoria. "They want a place that's within walking distance and also has the amenities of a home that you won't find in a hotel," he said.

He believes that Airbnb and other short-term rentals in New York City should be regulated, but he doesn't think LL18 does enough to protect small-time hosts like himself, who wouldn't be able to rent out their space long-term.

"I agree with the sentiment behind the regulations," he said. "I just think that the regulations were designed as sort of blunt instruments rather than a precision tool."

Since Paul was laid off from his job as a TV producer a few months ago, the family has come to rely on the income from short-term renting. He also feels they're doing a service for visitors who need a more affordable place to stay in the neighborhood.

"The best use of that space I could think of is to rent it out to local families," he said. "The way we use this space is good for Astoria, and it's good for New York, and it makes living here easier."

Have you been impacted by New York City's short-term rental regulations? Reach out to this reporter at erelman@businessinsider.com.