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NYC fines hotel company $1.2M over illegal short-term rentals
By
Michelle Bocanegra
and
David Brand
Published Mar 4, 2024
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hoto Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images
By
Michelle Bocanegra
and
David Brand
Published Mar 4, 2024
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A hotel company accused of reaping millions of dollars from nearly 70 illegal short-term rental units in Manhattan and Brooklyn will pay a $1.2 million fine to New York City as part of a settlement filed in state Supreme Court on Monday.
The city sued LuxUrban Hotels Inc., formerly CorpHousing, for turning 67 apartments in more than two dozen buildings into illegal short-term rentals between 2019 and 2022. The scheme brought in nearly $4 million, according to a lawsuit filed on Monday, the same day as the company and city reached the settlement.
City and state laws prohibit property owners from renting out entire apartments for less than 30 days, but the practice went largely unpunished as landlords turned apartment buildings into de facto hotels using platforms like Airbnb and Booking.com
In the lawsuit, city lawyers said the illegal rentals caused “serious safety risks for the transient occupants of those units, significant security risks in buildings not equipped to handle the security problems associated with transient occupancy, and a degradation in the quality and comfort of the surrounding residents and neighbors.”
An attorney representing LuxUrban did not respond to an email or phone call seeking comment on the settlement.
The city’s investigation found LuxUrban used the websites Booking.com and Expedia to advertise apartments in Hell's Kitchen, Chelsea, the Upper West Side, Cobble Hill and other parts of Manhattan and Brooklyn — and rented the units out illegally 4,300 times, according to the lawsuit. The company operates by signing leases for apartments or hotels in major cities and then subletting them as short-term rentals, according to federal business documents.
The case stemmed from an investigation brought by the Office of Special Enforcement under the Mayor’s Office of Criminal Justice, which is responsible for enforcing the city’s crackdown on short-term rentals.
The settlement comes six months after the city began stricter enforcement of illegal short-term rentals under new laws prohibiting companies from processing payments for stays of under 30 days except in limited circumstances.
Just three weeks after enforcement began in September 2023, the number of short-term rentals listed on Airbnb, the largest such platform, plummeted from around 10,000 to fewer than 500 approved by the city.
Supporters of the tougher crackdown say short-term rentals intended for tourists remove permanent apartments from the market during New York City’s severe housing shortage.
But detractors, including smaller property owners who list apartments in their two- and three-family buildings on short-term rental platforms, say the crackdown is eliminating an important source of income for them. They also say the city is capitulating to the interests of the powerful hotel industry.
Tagged
new york city
housing
manhattan
brooklyn
economy
Michelle Bocanegra
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David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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