New York State Law May Threaten the Future of Airbnb

On May 21st 2014 Airbnb reached an agreement with the New York Attorney General to handover anonymous data on its hosts in New York City.  The Attorney General has been pursuing this information to better enforce a 2010 state law that prohibits rentals in multiple dwelling buildings for less than 30 days unless the permanent occupant is present and to collect taxes on these rental transactions.  The Attorney General can receive the specific details on hosts it thinks are breaking the law.  Given the involvement of the Attorney General and the greater transparency surrounding the legality of peer to peer lodging in New York City, it is likely that Airbnb will experience problems with supplying apartments to rent in New York City.  The agreement may also serve as a template for other cities looking to regulate the sharing economy, undermining the company’s long term growth prospects.

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