City Sues Ring of Illegal Hotel Operators for Turning Housing Into Profit Across 36 Buildings, Three Boroughs - OSE

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City Sues Ring of Illegal Hotel Operators for Turning Housing Into Profit Across 36 Buildings, Three Boroughs

June 19, 2019

Operators generated more than $5 million from nearly 60,000 guests and removed dozens of housing units from the market

NEW YORK—The Mayor’s Office of Special Enforcement (OSE) filed a lawsuit Wednesday in Queens County Supreme Court Civil Term against 13 individuals and entities for using Airbnb and other platforms to turn housing units in 36 different buildings—in Queens, Manhattan and the Bronx—into illegal hotels. Between 2015 and 2019, nearly 60,000 guests were misled into booking rentals they believed to be safe, sanitary and legal, while the operation received over $5 million in payments from Airbnb, according to the City’s complaint. The lawsuit represents the OSE’s first illegal hotel action filed in Queens.

“Across the city, communities are threatened by an industry that allows illegal operators to mislead visitors and turn housing into profit. OSE will continue to hold illegal operators accountable and work to keep neighborhoods and visitors safe. New Yorkers deserve to have their housing protected, and visitors deserve safe, legal accommodations when they visit our city,” said Christian Klossner, Executive Director of the Mayor’s Office of Special Enforcement.

OSE estimates the massive illegal short-term rental operation removed more than 60 units of housing from the market for New Yorkers. OSE found evidence of illegal short-term rentals in a wide variety of housing stock, including:

Two single-family homes in Astoria

Nine two-family homes in Astoria and Washington Heights

Six three- and four-family homes in Astoria, Ridgewood and Hamilton Heights

10 predominately rent-stabilized buildings in Manhattan and The Bronx, six of which were still regulated in their entirety

OSE also discovered units being illegally rented full time at 9 out of the 16 buildings at Acropolis Gardens, a formerly rent-stabilized garden apartment coop complex in Astoria.

Hundreds of negative reviews from guests indicate unsanitary and unsafe conditions such as a lack of windows, heat and hot water, as well as dirty and overcrowded shared accommodations. Guest reviews also indicated the operators misled them through false/inaccurate listings advertised conditions.

Illegal hotel operators often create multiple listings and host accounts to avoid detection by enforcement agencies. The operators in this case used 210 different listings created by 28 different host accounts on the platform. OSE used data obtained through an administrative subpoena to link the operators who were using the same phone numbers and bank account information. The oldest host account dates back to 2012, suggesting the operation began years earlier. OSE’s investigation was sparked by a complaint from a concerned neighbor.

Astoria, Queens, where the bulk of the illegal activity took place, has long been a centrally located, affordable neighborhood home to a large number of immigrant communities, though residents have faced steep rent increases in the past decade. The area has also seen a loss of housing units through Airbnb and other platforms that promote illegal short-term rentals, with listings on Airbnb doubling over the past five years.

A copy of the City’s complaint can be found here.

OSE recently launched a public education campaign to help ensure New Yorkers and guests know their rights and how to take action when they suspect illegal short-term rental activity. Anyone looking for more information is encouraged to visit nyc.gov/stayintheknow.

“Dubious commercial operators who break the law to convert residences into illegal hotels pose a severe threat to the quality of life of my constituents. I am thankful to the Mayor's Office of Special Enforcement for their continued efforts to protect our affordable housing stock and to undertake public safety measures on behalf of all New Yorkers,” State Senator Brad Hoylman.

“It’s shameful that these illegal hotel operators used rent-stabilized properties for their own personal gain. In the midst of this affordability crisis in Northern Manhattan—and across the entire city—those apartments should be for families in need, not for Airbnb profiteers. It adds insult to injury that these units were not even well-maintained. I’m grateful to the Mayor’s Office of Special Enforcement for their careful work in putting a stop to this nonsense. By attacking the housing crisis on all fronts, we City and State elected officials can do our part to support tenants’ rights,” said State Senator Robert Jackson.

“All New Yorkers who care about protecting residential housing should be grateful when the City pursues cases against alleged violators of the law against illegal hotels aggressively and effectively,” said Assembly Member Richard N. Gottfried.

"As tens of thousands of New Yorkers sleep in homeless shelters, the City continues to uncover individuals and business entities who are reaping millions by engineering illegal hotel stays in apartments that are supposed to be homes. The lawsuit filed today by the Office of Special Enforcement is another powerful example of their precedent-setting efforts to rid our city of these illegal --and unregulated-- hotels. I want to thank Mayor de Blasio and Executive Director Klossner for staying with the fight to protect our housing stock from illegal conversion – of profound importance as New York City continues to undergo an affordable housing crisis," said Council Member Helen Rosenthal.

“We applaud the administration and OSE for their tireless work to curb illegal hotels. Clearly, the corporate entities who promote illegal hotels have no interest in obeying the law,” Tom Cayler, West Side Neighborhood Alliance.

"Short-term rentals remove available space needed for housing and contribute to rising rents. We need more investment in long-term affordable housing for New Yorkers in my district and across all five boroughs, not short-term rentals disguised as permanent housing. I commend OSE for their successful and continued investigations into this issue." said Council Member Keith Powers.