Peer-to-peer subletting startup Kiki is set to pay more than $152,000 to New York City Mayor’s Office of Special Enforcement after it helped users arrange short-term stays that violated the city’s rental regulations. The settlement closes a case accusing the Auckland-based service of violating local law by lacking safeguards and recordkeeping, despite marketing an easy means for renters to sublet their apartments while on vacation.
What New York City’s Local Law 18 Demands From Hosts
Local Law 18, New York City’s short-term rental registration system, tightened regulations on stays that were shorter than 30 days in Class A residential buildings. The law mandates hosts to register with the city, bans whole-apartment rentals without the permanent tenant or owner present, and prevents listings in buildings or leases that outlaw leasing activity. Importantly, booking services have to use the city’s verification system to check whether or not a host is registered or exempt before accepting a reservation.
There are also additional reporting obligations and compliance responsibilities for platforms. The law requires that unverified transactions incur a penalty of $1,500 per booking or three times the revenue received, whichever is lower, and all companies must deliver regular transaction reports for qualifying listings. The framework is designed to protect permanent housing, shield tenants from illegal hotel operations, and provide oversight of intermediaries and hosts.
How Kiki Broke New York’s Short-Term Rental Rules
Over nearly 400 short-term rental transactions, Kiki allegedly neglected to verify via the official system and failed to file the necessary quarterly reports with the city, according to authorities. The startup — which matches leasers of apartments with those seeking temporary homes through an interface that looks like a dating app (actual photos, amateur bios) — promised streamlined sublets for terms up to six months but also facilitated stays in violation of registration and presence rules. The company settled the case without admitting or denying the findings of the city.
Christian Klossner, the executive director of the Office of Special Enforcement, said the development should be a warning to platforms that facilitate unregistered or illegal short-term rentals, adding that flouting New York City’s laws comes at a cost. Blackbird-backed startup Kiki copped to operating in a grey area of the law as it tested its marketplace model when previously contacted about running a share service for Uber drivers by SmartCompany.
A Market Shaped by Enforcement and Host Compliance
The settlement comes as New York’s short-term rental market undergoes a massive reset. When Local Law 18 took effect, Inside Airbnb reported an 85 percent reduction in short-term listings across the city, highlighting how registration and host-presence rules had transformed supply. The changes have effectively moved many stays to hotels or longer-term rentals that do not bring the short-term provisions into play.
For marketplaces, the lesson is clear: Compliance must be productized. This includes logging registration at onboarding, verifying each booking against the city’s system, and maintaining detailed logs of every transaction. A platform handling hundreds of stays can accumulate fines rapidly; with unverified bookings subject to a $1,500 penalty, there’s significant exposure even without possible multipliers based on revenue.
Implications for Platforms and Renters in New York
Kiki’s plight highlights the tension between venture-backed growth strategies and municipal housing rules intended to ensure that apartments do not become de facto hotel stock.
Clients should take away as a practical matter that subletting is heavily regulated, and use of a third-party market does not insulate anyone from the downside if the underlying activity violates the rules for the building, lease, or even city law.
Experts who monitor urban housing policy observe that New York’s strategy embeds legal responsibility at three points in the chain — hosts, platforms, and even buildings — so evading the law’s measures proves a challenge due to built-in redundancy. Such multi-actor accountability is increasingly the norm in other big cities that are trying to preserve long-term housing stock.
Kiki Looks To London Amid New Compliance Questions
With New York penalizing it, Kiki has shifted its sights onto London. That market comes with a different but similarly confusing rulebook: Greater London itself restricts total-home short-term lets to 90 nights per year without explicit planning permission, and landlords have to abide by building or lease restrictions. Finally, the UK’s Right to Rent regime compels landlords to check the identity and immigration status of tenants or face substantial penalties.
If Kiki is to avoid a repeat of its New York outcome, verification and reporting must be baked into every step of the workflow — verifying planning status, enforcing night caps, and documenting host eligibility. “There’s a broader lesson here for housing subletting startups,” said Thrun, “The product/market fit in the areas of housing is also a product/law fit… Platforms which treat compliance so lightly will find that not just users but regulators have veto power.”
