Founded in Auckland, Kiki Club introduced its peer-to-peer subletting platform in New York City in 2023, aiming to assist tenants in finding subletters for their apartments during extended trips.
Yet, Kiki’s approach conflicted with New York’s short-term rental regulations, resulting in the company’s closure this June. On Wednesday, the New York Mayor’s Office of Special Enforcement (OSE) revealed that Kiki agreed to pay over $152,000 to resolve the allegations.
Supported by Blackbird, Kiki positioned itself as an Airbnb alternative, pledging to streamline subletting and offering users the ability to sublet their homes for as long as six months. The service matched renters and listers using a preference-based system reminiscent of dating apps.
Nevertheless, the company soon ran afoul of New York City’s short-term rental rules, particularly Local Law 18, which took effect in 2022. This law enforces strict requirements for short-term rentals, only permitting them if the host is registered with the OSE and fulfills other conditions, such as residing in the same unit as their guests.
When these rules were enacted, many Airbnb hosts struggled to comply, causing an 85% plunge in short-term rental listings, according to data from Inside Airbnb, a group that tracks the platform’s activity.
The law also mandates that booking platforms use OSE’s system to verify whether hosts are registered or exempt. Transactions that are not verified may be fined $1,500 or three times the revenue generated, whichever amount is less.
OSE reported that Kiki did not provide the required quarterly reports for qualifying short-term rental listings and failed to verify close to 400 transactions involving short-term rentals.
“This settlement makes it clear: Companies that enable short-term rentals and disregard city regulations will face steep costs,” said Christian Klossner, OSE’s executive director, in a statement. “Kiki Club operated as a covert channel for unauthorized and illegal short-term rentals, directly counteracting the city’s initiatives to safeguard tenants and maintain permanent housing.”
Although Kiki neither admitted nor denied the violations, it has paid the fines. A Kiki spokesperson previously told SmartCompany that the company recognized it was operating in a “gray regulatory area.”
Despite the major setback in New York, Kiki is not giving up. The company revealed in June that it is now launching in London.
It’s also worth mentioning that the U.K. enforces its own rules regarding unlawful rentals. Renting to individuals who are not legally permitted to rent in the U.K. can result in up to five years in prison or substantial fines.
Hopefully, the company has taken New York’s experience to heart so that its London venture avoids a similar outcome.
