Airbnb And Other Short-Term Rental Platforms Shake Up Hamptons Market

Phil Keith and his partner, Laura Lyons, are what Airbnb calls “superhosts.”

With a near-perfect rating on the popular rental platform, the couple welcome short-term travelers from all over the world to stay in their cozy, shingle-style abode in the Tuckahoe woods — offering up their guest bedroom, complete with a queen-sized bed, private bath and charming accouterments, for weeks or mere days at a time.

And, more often than not, Mr. Keith and Ms. Lyons are breaking the law.

“The bottom line is, it pays our real estate taxes,” Mr. Keith said, “and for us, that’s a pretty good burden to get out from under.”

In Southampton Town, hundreds of homeowners, including Mr. Keith and Ms. Lyons, have turned to Airbnb to rent out their bedrooms, guest houses or entire properties to help fuel tourism, while simultaneously offsetting the ever-rising costs of living on the East End — despite regulations that prohibit “transient” rentals of less than two weeks. The exception is during special events and occasions, such as the 2018 U.S. Open at Shinnecock Hills and the annual Hampton Classic Horse Show, when short-term rentals help make up for the region’s absence of traditional hotel and inn options.

In providing its platform to connect homeowners with renters, Airbnb and similar housing sites — such as HomeAway and Vrbo — have changed the face of the East End rental market, rendering once-flourishing full-summer rentals nearly obsolete. Today, shorter-term stays are king.

That’s much to the chagrin of some real estate professionals and irritated neighbors, who question the platforms’ effects on quality of life, safety and even affordable housing, as well as their legality, both on a national scale and local level.

“I know that there’s the two-week minimum, and the thinking right now seems to be of two minds,” explained Mr. Keith, who serves as a member of the Southampton Town Planning Board. “One is, what harm is there? The two-week minimum is on the books, but how much are we giving up by not having these people come out?

“In other words, we may try to stop somebody from renting for a weekend, but, during that weekend, how much money would those guests spend in town, at shops, at Citarella’s, at restaurants, at gift stores, at the pharmacy, on theater tickets, whatever? And we’re losing that revenue if we don’t provide a place for people to stay so they can spend that money,” he continued. “Even though I doubt that anybody could point to any particular solid figures, there’s at least that sense that we’re gaining more than we’re losing by letting that slide.”

East Hampton Town Supervisor Peter Van Scoyoc doesn’t agree, pointing to surges in traffic, high turnover, and the pressure and strain it places on town staff when the year-round population of 24,000 quintuples to 120,000 on any given summer weekend.

As East Hampton Town law currently stands, short-term rentals of less than 15 days are allowed only twice in a six-month period within the rental registry, though if the proposed stay is two weeks or longer, there is no limit on the number of times a homeowner can rent.

“We’ve seen a lot of the negative aspects of short-term rentals,” Mr. Van Scoyoc said. “There certainly are positive aspects. We understand out here that a number of our residents do rent their properties in order to help pay for college tuitions for the children, to be able to afford to pay the taxes on their house, and whatnot. We certainly support the ability for people to rent their homes.

“However, if it changes the economy such that investors are coming and buying up homes that would otherwise be available for rental year-round, and turning them into Airbnb ‘hotels,’ that really completely skews the local economy. It impacts and further exacerbates the housing issues that we have.”

In what Mr. Van Scoyoc admits is an “extreme analogy,” the supervisor looks at Airbnb as the middleman in a hypothetical online drug transaction — and no less culpable than the dealer or the buyer.

“Airbnb has a responsibility to ensure that local municipal codes such as ours are not being violated — but they’re happy to take a fee and turn a blind eye, and I don’t think that’s right,” he said. “I know there are a number of actions being taken by cities and other municipalities nationwide, and we’re probably going to be looking at joining in that approach.”

Nationally, some major cities — including San Francisco, Las Vegas and New Orleans — are cracking down on short-term rental regulations, citing inflated rents, intensified gentrification and the hit taken by the hotel industry. Charleston, South Carolina, is the only city in the nation that criminally prosecutes for illegal short-term rentals, which is considered less than 29 days, serving a hefty fine of over $1,000 per conviction.

While Airbnb took down thousands of Boston-area home listings without a city registration following a legal settlement late last year, the company maintains that regulation responsibilities do fall on individual cities and towns, according to Liz DeBold Fusco, Northeast press secretary for Airbnb.

“Our position is that we have an entire page where we advise hosts to consider their obligations under the law,” she said. “At the end of the day, enforcement is the responsibility of the city. There’s obviously exceptions where cities, typically big cities, pass laws in which we have a legal obligation, but where that is not the case, under the law, enforcement is the responsibility of the city.”

In 2019, Airbnb reported that Suffolk County alone saw local hosts earn $51 million after service fees from 142,000 guest arrivals, as compared to $7 million and 30,000 guest arrivals in Nassau County — a disparity that Ms. DeBold Fusco largely attributes to the South and North Forks.

“It’s important to emphasize this has always been happening on the East End. This isn’t a new thing,” she said of the rental market. “Vacation rentals have always been an important part of the economy — one of the cornerstones of the East End’s economy is tourism. We know that a lot of people, a lot of local residents, depend on being able to share their home in order to make ends meet, or to pay for property taxes, or to stay on Long Island, which is obviously a concern for many Long Islanders.

“Our vision for the platform is that it can be an economic resource, while also helping to drive economic activity in communities,” she continued. “At the same time, though, we recognize that regulation is important, and we have worked with hundreds of communities around the world on regulation in order to find a balanced path forward for regulation. We’re here to be a good neighbor and not just a corporate influence.”

As East Hampton Town is considering tightening its short-term rental regulations, Southampton Town is looking at relaxing its two-week minimum, according to Supervisor Jay Schneiderman.

“A lot of people are looking to rent their properties, and the market for two weeks isn’t really there,” he said. “Families are looking for a one-week rental, and I think there’s a lot of them going on, but they don’t comply with the code, and people are doing it anyway. The town has taken some enforcement actions against people who are flagrant violators, but, other than that, I do think we need to catch up with the times.

“In the old days, people would rent from Memorial Day through Labor Day. That market has dried up,” he added. “You don’t really see people who can do that anymore, or are looking to do that anymore. Even the monthly rentals, there really isn’t a strong market for that. People want to rent for a week and enjoy the area with their family.”

Though weekly rentals are in high demand, they risk maxing out East End infrastructure, according to Judi Desiderio, the chief executive officer of Town and Country Real Estate.

“I don’t think that the towns and the villages are really manned and equipped to satisfy the number of people who now come out to visit. It’s maximum capacity,” she said. “The plus side to it is that many people who had not experienced the East End are now experiencing the East End, and they’re expressing interest in either a longer-term rental, a proper seasonal rental, or even buying. It’s shades of gray. It’s not black and white.”

Proponents on both sides of the issue mostly agree that packing 10 people into a two-bedroom rental versus letting a couple stay in a guest room are vastly different scenarios, and require different sets of legislation, especially at a time when online short-term rentals are more mainstream than ever.

“I know a lot of people here who go to other areas, and they will use Airbnb or VRBO, whether it’s Aspen, Colorado or Mexico City,” Mr. Schneiderman said. “They will use those platforms to rent a few nights. I think they’re becoming more and more common, and acceptable, and some of these platforms are putting more and more protections in to address the issues like the party groups.”

Last Halloween, a mass shooting at a house party in Orinda, California, left five people dead and four others injured — at a property that just so happened to be an Airbnb. In a statement released a week later, Airbnb addressed the incident and vowed to verify all 7 million listings on Airbnb by December 15, 2020.

The platform also launched an Airbnb Neighbor Hotline, staffed with a rapid response team that provides 24/7 live support, and banned “party houses” and “open invite” events altogether.

“There are new things we’re doing on this that people aren’t aware of, and they’re really important for people to know how seriously we take safety, quality of life and trust,” Ms. DeBold Fusco said. “We are one platform. We are very big, but we are not the only one. Certainly, on Long Island, there are a lot of others, so I can’t speak to them. But what we hope people understand with those new tools is, we hear people, we’re listening, and we want to respond to that. And that’s what we’re doing.”

To help with compliance, Mr. Van Scoyoc suggests that Airbnb adjust its rental calendar to no longer allow for illegal short-term rentals in East Hampton Town.

“I don’t think it’s that difficult for somebody to program their system in a way that would track that information, and maybe say, ‘Sorry, we cannot complete this transaction because the property’s already been rented twice within a six-month period for less than 14 days,’” he said. “It wouldn’t be that difficult to keep a calendar. I don’t think they want to be in that position because they obviously get a fee every time. The more transactions, the more money they make. It might impact their bottom line, because I don’t think they’re that focused or interested in whether or not the people they put together abide by the law.”

For Mr. Keith and Ms. Lyons, they have edited their calendar to allow only two-night minimums, or three-night minimums on big weekends, such as Memorial Day and Labor Day, and the Fourth of July — stays that earn the couple less than $10,000 a year, he reported.

“We didn’t have too many in the first year or two, but it’s built up nicely,” Mr. Keith said. “That’s like having a little extra part-time job you don’t have to work too hard to pull off. Laura just loves it. She’s one of these people-persons. She just loves meeting these people.”

Since 2014, they have hosted guests from the United States and China to South Africa and Luxembourg, each visiting for sheer fun or with a specific activity in mind — recently including a student who annually attends the Southampton Writers Conference, and even a rider in the Hampton Classic.

“No, it doesn’t bother me,” Mr. Keith said of violating the law. “And even though I’m a town official, it doesn’t seem to bother the town, either. You’re kind of cutting your nose off to bite your face if you go after these people, because how much are you losing in local revenue? I think that’s where they are now.”