Why are vacation apartment rentals a bad idea in New York City?

 

Unlike much of the world, short-term vacation apartment rentals in NYC are often outright scams or likely to be illegal.

 A good recent article in the NY Times explains the issues well: 

NYC Department of Buildings website:  You can look up any address in the city, see the law, read complaints and violations. 

Please be careful, finding a legal rental apartment in the city requires a good deal of work.  While the law has recently been clarified, it is difficult to understand, even for someone who works in the industry.  However, you can rule out almost all co-op apartments, and most condos. All rent controlled and rent stabilized apartments are out as well.  Most unregulated large newer rental buildings are out as well, but mostly because the landlord can make more by renting it out monthly  (Sept 2012 average rent for a newer 1 bedroom, unfurnished, utilities extra is about $4,000 a month.). 

 

You pay your money, you takes your chances. Consider a hotel instead.

A short-term vacation apartment rental in New York City is a gamble. No one knows what the exact odds are, but it's better to steer clear of them. Renting an apartment for a visit is probably the most popular and most volatile topic on the NYC Forum.

But I've done this in other cities!

Here's the key to understanding this difference: some cities have laws that are different than the laws in NYC.

Many tourists who have succesfully rented private apartments for vacation lodging around the world fully expect to be able to rent an apartment while visiting NYC. It is therefore quite difficult, at first, to accept when you are told, "No you can't."

You might have even sucessfully rented a vacation apartment here in the past. Most people who rent vacation apartments here rent illegal or violative ones without even knowing it and without incident. But since you asked the question you will get honest answers. You can choose to ignore those answers or not. But here is an example. Lots of people purchase pot without any problems. That does not make it legal. While almost everyone knows that pot is illegal here, most people are unaware that vacation rentals are almost always illegal or violative of building rules. Now that you know only you can decide if you want to ignore this information or not.

What's the problem?

SCAMS AND HAZARDS: Most users of the NYC Forum will advise against short-term apartment rentals because many of the situations are scams (the apartment may not exist, or “bait-and-switch” tactics may be used), because of safety concerns (your ability to leave the building in case of fire, for example) and because of the possibility of eviction during your stay. Anyone can put photos and an ad on the internet. Keep in mind that "brownstone townhouses" are not like townhouses in the suburbs. They are usually over 100 years old and look it.  Older buildings up to 5 stories high were not required to have elevators. Typical apartments in Manhattan are small, do not have much closet space and usually have very small bathrooms. That "open plan kitchen" in a "loft space" could mean that it's just a 450-square-foot (42 square-meter) one-room studio with a kitchen against the wall.

BUILDING RULES: Aside from local laws, many large apartment buildngs in NYC are condominiums or co-operatives (co-ops), and they are governed by rules about what their residents can and can not do. Most likely, their rules prohibit renting apartments to tourists on a weekly or daily basis. If the neighbors are fed up with a resident who has tourists coming in and out on a weekly basis, and if they don't want strangers to have copies of keys to the building, they will check with the super or management company to find out what's going on.

LOCAL LAWS: Short-term (less than a month) rentals of apartments in New York City violate various laws and building regulations.  In general, renting an apartment to someone without a lease for less than 30 days at a time is illegal. The current local laws are confusing and often do not get enforced, but revised laws that are clearer take effect May 2011. Are there exceptions? Yes, especially for OWNER OCCUPIED buildings with 4 or fewer apartments, including the owner's apartment. But odds are the apartment vacation rental you're considering is NOT an exception. Check the DOB website above for building info, dont waste your time researching the internet until 3 in the morning trying to find that needle in NYC's housing haystack. Hosted stays in apartments or bed-and-breakfast accommodations present a different legal and regulatory situation. In Manhattan, though, these may cost about the same as hotel accommodations.

TYING UP THE HOUSING MARKET: Housing is already a hot commodity in NYC, and affordable housing in Manhattan is an endangered species. In the pursuit of higher rents and better income, some landlords illegally convert buildings into hotels. One can also make the argument that locals who hold leases on apartments they don't use creates an artificial real estate shortage and drives up rental prices. There are 3 million households in NYC. If even one half of one percent decides to rent out their lodging to tourists, that would take 15,000 living spaces off the market. Some might say your'e helping the economy, but for whom? There are lots of issues that follow in the wake of such rentals.

IMPACT ON LOCAL RESIDENTS:  Most locals don't like having strangers coming and going in their place of residence. Even worse, some residents are innocently used as pawns in apartment scams, unbeknownst to them!

I can't believe there are no legit vacation apartment rentals!

Yes, there are some legit and legal ones out there, but they're hard to find and there's no way to tell from an ad or website what you're getting. Some newer buildings permit unit owners to rent or sublet on a daily or weekly basis because that was what was in demand in the early 2000s. A lot of new construction has happened in areas with new or revised zoning laws. Some fancy new apartment buildings can't even give away their units in this economy and have converted from condo to rentals. Etc, etc, yadda-yadda-yadda. But again, you'll just have to take it on faith that you're not breaking a rule, bothering neighbors or being scammed. To find out if you are renting in a building with illegal rentals complaints or any other type of building violations, use free interactive map of building violations published based on weekly data provided by the Department of Buildings.

What's the worst that can happen?

 Here's the breakdown:

1) Nothing. You rent, you come, you stay, you leave. You have no idea whether it's legal or not. Except for making the NYC housing market more difficult for locals, nothing bad happens to you.

2) You rent, you come, you find the apartment not as advertised. It's not what you expected, you don't get homey service, and the managers are unresponsive. You didn't realize that most NYC apartments are old, small, unglamorous and not luxurious. You choose between staying or not, but getting a refund is unlikely, so you might be out what you have paid, etc.

3) You rent, you come, there is no apartment. Or, there is an apartment that belongs to someone else. Or, the scammer is using a hotel's address. You are out whatever you have paid, you have to spend lots more to find a hotel.

4) You rent, you come, you are thrown out of the building. If the place is part of an illegal hotel, it can be shut down by the FDNY or the NYPD. Seriously. Again, you are out what you have paid and have to find another hotel.

 

But the website I used seems reputable and legitimate! And they advertise in guidebooks and on travel websites, too!

Websites advertising short-term apartment rentals in New York City do not screen or verify the advertisements, and so they provide no guarantee of legality or conformance to building regulations. Therefore it is extremely difficult to recommend any apartment rental websites for New York City.

note: these websites often are legitimate.  Housing laws in the USA are local laws, so the rules can differ from town to town.  With over25,000 cities, towns, etc. here it almost impossible for sites to know the local laws, so most rely on the person making the listing to know, and comply, with the law. 

But otherwise, I can't afford to visit NYC! I thought this was a free country? I'm helping locals make some extra money! And besides, what does this have to do with me?

There are plenty of hotel deals to be had in NYC. And there are many apartment-style and suite hotels here, too. You can use a website like Better Bidding to decode Priceline's hidden hotels.

 

Can I get my money back if I am scammed?

The short answer is POSSIBLY NOT. 

  • Since it is likely that your transaction is illegal (don't worry, you won't be cited in any way) your recourse is limited if there is a problem.
  • PayPal does not offer any guarantee when it comes to "services," which is what vacation rentals are.  
  • If you book through a third party rental company, it depends entirely on the third party company. Some may, but many will say that they're just a clearinghouse for ads, and that you have to take your beef up with the owner.

How can I tell if it's a scam?

RED FLAGS:

  • The price is too good to be true.
  • They don't charge tax, or charge the incorrect tax (currently 14.75% plus an additional $3.50 per night).  Most of the time tax is extra.  If not there should be a clear statement saying the price listed included the tax.  (ie Price includes 14.75% combined city and state sales tax and combined $3.50 city and state hotel occupancy tax) 
  • The description in unrealistic. Here is an example: An amazing 2500 sq ft 2-BR, 2 BA in Midtown Manhattan that "sleeps 8," and is "overlooking a lake" with its own "private dock" and a "porch," that is also "walking distance to Central Park."  But the real kicker is that it had "ample parking."
  • They want you to send full payment up front by MONEY ORDER via Western Union or wire transfer,  As long as one has the codes, one can pick up the funds at ANY Western Union office. So you think you are sending money to NYC, but it gets picked up in California (or somewhere else).
  • The address does not exist on a mapping website or directory.
  • The information on the NY. DOB website indicates it is an illegal hotel. 
  • They get snippy and angry at you if you question any aspect about the apartment, especially when you ask if it's a legal rental.
  • They match the qualities listed on this craigslist page about scams.
  • Research the name of the business and the person renting it. Sometimes, you'll discover something very interesting.

I really like staying in a homey atmosphere, but I don't want to get ripped off or disregard local laws. Are there alternatives?

Many visitors to New York find that apartment-style hotel accommodations are a convenient substitute for short-term apartment rentals. If you provide information on the number of people in your party, your travel dates and your budget, fellow TripAdvisor forum posters can provide recommendations.

Rentals of longer than a month but less than a year, while not always absolutely prohibited, are both uncommon and are subject to many of the same regulatory issues as short term rentals. For any vacation stay, TripAdvisor members can recommend either an apartment-style hotel, or a corporate housing hotel, because determining whether your lease is legitimate is extremely difficult and poses too many risks to be a good idea.

Why doesn't the City close the illegal places down?

The City does enforce the law, but it isn't easy, and much of the effort is directed to large scale illegal conversions. Complaints are investigated, but the inspector must find evidence of use as an illegal hotel to shut it down.  Essentially, he has to find transients in the apartment who admit that they are renting short term.  Not likely, as you can see on the DOB site.