New York City lawmakers promised that squeezing illegal short-term rentals would free up apartments and cool rents.
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Yet, two years into strict enforcement and the crackdown on thousands of illegal listings, rents remain near record levels. What’s more, the vacancy rate in Manhattan recently hit a record low of 1.4% [1].
For many residents the lesson is simple: A crackdown on Airbnbs may have shut down unlicensed hotels in trendy neighborhoods, but it’s not a substitute for building more homes.
Why NYC banned Airbnbs
The rationale behind the crackdown was twofold: First, it was meant to tame the influx of tourists who were impacting the quality of life of local residents who were left feeling crowded out of their own neighborhoods.
The second objective was to boost housing inventory for locals, with the belief that the ban on short-term rentals would increase the housing stock as units that had been repurposed for tourism would revert back to long-term housing.
But two years later it’s clear that the ban hadn’t accomplished its second objective.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
Why the Airbnb ban fell short
Local Law 18, which went into effect in September 2023, requires hosts to register with the Office of Special Enforcement and bars platforms from processing bookings without a valid registration.
Before the passage and enforcement of the law, officials estimated there were 60,000 illegal listings in 2018. Of these, more than 38,000 listings were “on one site” (i.e. Airbnb) at the start of 2023. According to New York City Mayor Eric Adams’s office [2], illegal short-term activity has been “eradicated” to a large degree due to the law. Today, roughly 3,000 active short-term rental registrations remain.
The Wall Street Journal found that not only were the number of short-term rentals a tiny fraction of the total number of housing units in the city, many of the units prohibited from being rented short term did not reappear as standard yearlong rentals [3]. Instead, some owners pivoted to stays of 30 days or more or kept units for personal use. Years of underbuilding and strong demand fueled asking rents reaching a record $3,800 in August 2025 [4], with Manhattan’s median hitting $4,571 in May [5].
Not only did renters not see relief from the elimination of short-term rentals, other negative consequences followed. Three economists publishing in the Harvard Business Review show that tourists were particularly hard hit; their costs are on average $91 when access to Airbnbs is absent [6]. Moreover, the geographic area where travellers can find accommodations was constricted to hotels in specific districts.
So, who profited from New York’s short-term rental ban? Hotels, which saw their average revenue per night jump 7% from 2023 to $283 per night. During the holiday season in Manhattan in 2024, the average nightly rate was $417 — a record [7].
Did banning Airbnbs fix housing shortages elsewhere?
Like New York, other major tourist cities have taken action to limit short-term rentals too.
In July 2020, Amsterdam banned short-term rentals in three historic center districts. That ban was overturned in 2023 [8]. The net effect has been stricter enforcement of permitted rentals, not a clear drop in citywide rents.
Barcelona has pursued one of Europe’s toughest crackdowns, similarly citing surging housing costs and quality-of-life concerns in tourist zones. In June 2024, city officials set the aim to phase out all tourist apartments by November 2028, revoking more than 10,000 licenses amid a decade of steep rent and price gains.
Research found that short-term rentals increased rents by 7% in neighborhoods with the greatest concentration of units [9]. However, those increases were in tandem with property market cost increases in Spain as a whole, showing that vacation rentals are not the only cause of housing cost inflation.
Why outright bans may not be the solution to fix rent-burdened cities
In fact, the Harvard Business Review piece argues that outright bans are a blunt tool that don’t solve the housing problem [6], but do raise costs for tourists and remove a source of income for homeowners.
Instead, the researchers recommend caps on the number of nights a home can be rented, neighborhood-level license limits and platform-based enforcement with required data sharing. This would allow cities to keep occasional hosting during peak demand while making large-scale investor conversions less attractive.
How to cope with high rent
Rents may not fall anytime soon, but you can lower the strain on your budget and improve your odds of finding a stable place to call home. Start with the basics, then explore your city’s programs and tools already in place to help reduce your costs. Here are some ideas of what to do next:
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Build a simple budget that lists net income, fixed bills and flexible costs, then set a rent share you can sustain.
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Consider cutting costs elsewhere to allocate more to rent. The general rule of thumb is that your rent should not exceed 30% of your gross income, but you may need to tweak that based on local prices and the discretionary income available to you.
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If you are unable to find housing that meets your budget, consider subletting, or finding roommates or other family to split housing costs with.
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Explore less expensive neighborhoods, if you haven’t considered these until now.
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If you are rent-stabilized and age 62 or older, or have a qualifying disability, you can apply for the NYC Rent Freeze to lock your current rent. If not, consider if anything else would qualify you for programs or housing in your area.
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Book a session with a HUD-approved housing counselor for low- or no-cost help on budgeting, tenant issues and homebuying plans.
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Check NYC Housing Connect and New York State HCR lotteries for income-restricted apartments.
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If none of these options are available to you, it may be time to consider moving to an area where rent is more affordable.
These steps will not change market prices overnight, but they can protect your cash flow and buy you time. Stay organized, keep applying and revisit your plan each month.
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Article sources
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[1]. NYC Housing Preservation & Development. “New York City’s vacancy rate reaches historic low of 1.4 percent, demanding urgent action & new affordable housing”
[2]. NYC Mayor’s Office of Criminal Justice. “New report sheds fresh light on how Local Law 18 and Office of Special Enforcement have eliminated tens of thousands of illegal rentals in New York City”
[3]. The Wall Street Journal. “New York’s Airbnb crackdown, in force for two years, hasn’t improved housing supply”
[4]. Zillow. “New York, NY rental market”
[5]. Spectrum News NY1. “Manhattan rents hit another record as competition stays fierce, report finds”
[6]. Harvard Business Review. “What does banning short-term rentals really accomplish?”
[7]. The New York Times. “New York City hotel rates soar to record heights as holiday travel nears”
[8]. NL Times. “Amsterdam not allowed to ban Airbnb rentals in three neighborhoods: Council of State”
[9]. Research Gate. “Do short-term rental platforms affect housing markets? Evidence from Airbnb in Barcelona”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.