A New York City Housing Judge has found that a rent regulated tenant whose legal monthly rent is over $9,000 with a preferential rent of $6,670, was guilty of profiteering when he charged $649.00 per night for his luxury midtown apartment through bookings obtained from listings on Airbnb.
The tenant of record was found to have violated obligations of his tenancy in two ways. First, the Rent Stabilization Code that regulates this apartment, provides that a rent stabilized tenant may not charge another person occupying the premises any rent which exceeds the occupants’ proportional share of the residence. Proportional share is determined by dividing the legal regulated rent by the number of occupants residing in the premises. Here the judge simply calculated the daily legal rent for the apartment to be either $219.29 or $307.32 depending on whether the legal or preferential monthly rent was used as the basis for the calculation. The court found that in either case, $649.00 per night constituted profiteering and violated the Rent Stabilization Code. Second, the court found that rental of the apartment for a period of less than 30 days was a violation of the Multiple Dwelling Law. Both of these transgressions were determined to be incurable resulting in a judgment of possession for the landlord.
Airbnb has been under scrutiny by various government agencies and officials because of claims that use of the service often violates New York City statutes governing private residences and hotels. According to a recent report by New York State Attorney General Eric T. Schneiderman, hotels are regulated by higher fire safety standards than private residences and using rent stabilized apartments for short term stays jeopardizes guests when those apartments and buildings are not in compliance. Further, opponents of these short term rentals claim that they reduce the availability of permanent housing. And, the report claims, the city is losing millions of dollars in uncollected hotel taxes. Read the full report, “Airbnb in the City“, issued by New York State Attorney General Eric T. Schneiderman. And while landlord/owners of these apartments are seething about tenants profiting from regulations that prevent landlords themselves from reaping those benefits, regulated tenants who rent rooms for short stays often claim that they are just trying to make ends meet A particularly interesting case is Brookford, LLC v. Penraat. According to the decision the respondent resided in a rent controlled apartment with a regulated rent of $4,477.47. The decision reports that the tenant was the beneficiary of SCRIE, a rent freeze extended to senior citizens whose household monthly income is $50,000 or less and was only required to pay a monthly rent of $4,193.28. The plaintiff landlord claimed that the respondent tenant had rented rooms in her 4 bedroom duplex on Central Park West a total of 135 times in two years. Plaintiff further asserted that if the respondent successfully rented the rooms at the rates sought, she would be collecting over $106,000 per year, far in excess of her regulated monthly rent and in violation of the terms of her rent freeze. The court found in favor of the landlord.