New York City has decided to postpone the enforcement of a municipal law that could limit the number of individuals allowed to host rentals through the Airbnb online accommodation service.

The decision was revealed in a court filing made on 9 June 2023, offering temporary relief to the short-term rental platform. Airbnb had previously filed a lawsuit against the city, referring to the law as a “de facto ban” on short-term rentals.

The law was originally scheduled to take effect on 1 July 2023, but fines against hosts and booking services will now be delayed until 5 September.

Temporary stay of enforcement agreed

The city authorities and Airbnb have both agreed to a temporary stay of enforcement. The delay will provide them with the opportunity to present comprehensive briefings to the court.

Jonah Allon, deputy press secretary for the office of New York City Mayor Eric Adams, confirmed the agreement, stating, “Both parties agreed to a temporary stay of enforcement to afford them the opportunity to fully brief the issues before the court.”

Airbnb concerned over compliance and impact

Airbnb expressed concerns that the newly introduced law would create obstacles for hosts, making it harder for them to conduct their rental businesses.

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The law requires hosts to be permanent occupants of the units they rent out and mandates registration with the Mayor’s office of special enforcement (OSE) before posting rentals. Hosts would also need to comply with zoning regulations, dwelling laws and housing maintenance and construction codes.

Airbnb’s attorney, Karen Dunn, partner at Paul, Weiss, Rifkind, Wharton & Garrison, hoped that the city would use the extra time to collaborate on finding a sensible alternative solution for hosts, tourism and the local economy.

Impact on short-term rentals and Airbnb shares

In the first week of July 2023 alone, more than 5,500 short-term rentals are already reserved in New York City, set to accommodate over 10,000 guests, according to Airbnb. This demonstrates the significant demand in the city.

Following the news of the delayed enforcement, shares of Airbnb saw an increase of 5.7%, reaching $124.59.

The legal dispute between Airbnb and the New York City Mayor’s OSE will continue in the New York State Supreme Court in Manhattan.

The case is expected to address the contentious issues surrounding short-term rentals and the regulatory framework imposed by the city.