Subletting startup Kiki paid over $152K to settle charges after violating NYC short-term rental laws

Auckland-founded Kiki Club, which launched its peer-to-peer subletting platform in New York City in 2023, set out to help renters sublet their apartments while travelling for extended periods. But its model quickly collided with New York’s strict short-term rental regulations, ultimately forcing the startup to shut down operations in June.

On Wednesday, the New York Mayor’s Office of Special Enforcement (OSE) announced that Kiki has agreed to pay more than $152,000 to settle charges related to those violations.

Backed by Blackbird and positioned as an Airbnb alternative, Kiki promised a streamlined subletting experience, allowing renters to list their spaces for sublets lasting up to six months. The platform used a matchmaking system similar to those of dating apps, pairing hosts and renters based on their references.

However, the company’s approach ran afoul of Local Law 18, enacted in 2022. The law created strict rules for short-term rentals, limiting them to hosts registered with the OSE and requiring hosts to remain in the same unit during a guest’s stay.

When the law first took effect, many Airbnb hosts found compliance too complicated, triggering an 85% drop in short-term rentals, according to Inside Airbnb.

The legislation also requires booking platforms to verify whether hosts are registered or exempt using OSE’s verification system. Any unverified reservation risks penalties of $1,500 or three times the earned revenue, whichever is lower.

According to OSE, Kiki failed to submit required quarterly reports for eligible listings and did not verify nearly 400 transactions, placing it in clear violation of city rules.

“This settlement sends a clear message: If you are a company that facilitates short-term rentals, ignoring city laws will be an expensive proposition,” OSE executive director Christian Klossner said. “Kiki Club acted as a clandestine conduit for unregistered and illegal short-term rentals, directly undermining the city’s efforts to protect tenants and preserve permanent housing.”

Kiki neither admitted nor denied the allegations but agreed to pay the penalties. A spokesperson previously told SmartCompany that the startup recognised it was operating in a “grey regulatory area.”

Despite its fallout in New York, Kiki isn’t stepping away from the subletting concept. In June, the company announced its launch in London.

But the U.K. comes with its own regulatory challenges. Renting to someone who does not have the legal right to rent in the country can result in significant fines — or even up to five years in prison.

With its New York experience behind it, Kiki will need to navigate London’s laws far more carefully to avoid repeating history.