Money from HDFC Short-Term Rentals: Too Good to Be True?

Are you hosting Airbnb or other short-term renters in your HDFC apartment? Does this seem like a great way to make ends meet—or even to make big bucks?

Think again. 

You may be jeopardizing the safety and wellbeing of your entire apartment building. (Download this tip sheet to share with your neighbors.)

The city's HDFC rentals and co-ops were designed for low-income residents, not their businesses. And the continued affordability of th0ese HDFCs depends on their following rules and regulations to maintain their eligibility for special tax abatements and other subsidies.  Without this government funding, residents’ low monthly costs are in danger of rising to the high levels of market rate apartments.

UHAB was among many organizations and individuals expressing these and other concerns at the January 20, 2015, City Council hearing entitled Short Term Rentals – Stimulating the Economy or Destabilizing Neighborhoods?

Although most New York City short-term rental hosts live in apartment buildings, the vast majority of the testimony from the many Airbnb organizers and hosts (all decked out in Airbnb T-shirts and stickers) was from owners of private homes. It didn’t seem to matter that no one is questioning the legal right of private homeowners to host short-term renters. The issue, instead, is with apartment dwellers whose leases or government funding prohibit short-term rentals. 

Yet the pro-Airbnb private homeowners told story after story of how their short-term renters “helped me save my home,” “help me pay the medical bills from my chronic illness,” “helped my retail business survive,” “help me cover my maintenance every month.” 

A woman even introduced the audience to her husband, their toddler, and their infant, saying that they had run out of diapers waiting all day long to testify about the beauty of Airbnb and to beg the city not to make changes in laws or enforcement that could adversely affect their livelihood.

The testimony of Airbnb supporters included much talk of “me,” “my,” and “I.” Few addressed the negative impact that multiple short-term rentals in an apartment building can have on the rest of that building's residents. While hosts are busy counting their extra money, most seem to ignore the detrimental effects of their own good fortune on their neighbors’ quality of life. For HDFCs, in which short-term rentals can also put the financial health of the entire building at risk, the situation is especially troubling.

“Every week, there is a new group of tourists in our lobby trying to find their way to their short-term rental unit. The increased traffic of unfamiliar people with keys to our front door poses a risk to our building and its residents,” one HDFC shareholder explained. “Our governing documents do not allow for short-term rentals, so the detailed online rental ads threaten our HDFC status. Only the residents who are illegally renting their apartments reap the benefits of the short-term rentals while the neighbors shoulder all of the risks.”

Let's Find Solutions!

Are you struggling with short-term rental issues in your TIL, ANCP, or HDFC building?  Share your concerns with UHAB.

Other residents have reported issues including these:

  • Short-term renters—whose backgrounds have not been checked—may let in other strangers behind them when they enter buildings.
  • These visitors are usually on vacation, so late-night activities may mean that they return to apartments in the wee hours, disturbing building residents.
  • They often don’t follow New York City trash and recycling regulations, resulting in sanitation fines for the HDFC. 
  • The extra water usage and wear and tear (on both the individual apartments and the buildings’ public spaces) caused by multiple short-term renters ends up increasing expenses for all residents.
  • Building insurance doesn't cover commercial use of apartments.
  • Renting an apartment to someone who doesn’t meet HDFC residency requirements means breaking the rules of HDFC government tax subsidies.
  • Using Airbnb and other short-term rental companies, landlords are keeping apartments off the market for long-term renters, shrinking the city’s overall housing stock.  This drives up prices, making affordable apartments even more difficult to find.

What Can You Do to Help Keep Your HDFC Safe and Affordable?

Ensure that residents are adhering to the Propriety Lease—that no one is jeopardizing the building’s money-saving tax abatements and other subsidies by illegally using or occupying apartments.  Consult your Proprietary Lease, and (if necessary) update it as follows:

  • The clause on Cooperation should state that the shareholder shall uphold the purpose of the HDFC, which is to provide long-term affordable housing to people with low incomes.
  • Your House Rules should prohibit boarders, the operation of bed & breakfasts, etc.
  • The clause on Compliance with House Rules should state that a breach of House Rules is a breach of the Propriety Lease.
  • There should be a Use of Premises clause, prohibiting shareholders from using or permitting the use of any part of their apartment as a public business with clients coming and going.
  • Your Proprietary Lease should include a Primary Residence requirement, so that shareholders cannot disappear for extended periods and allow a series of strangers to occupy the apartments.
  • Your subletting clause should clarify under what circumstances subletting is permitted—IF it is permitted at all. This clause should outline how often subletting is allowed during any given time period, the approval process for doing so, and the percentage above the maintenance fee that may be charged by shareholders.
  • The lease should include a Waiver By Corporation, stating that even if the corporation failed to address a breach for an extended period of time, they can still—at any time—address the breach by taking action, such as initiating a lawsuit.