Kiki, an Auckland-founded subletting startup, has agreed to pay over $152,000 to settle charges brought by the New York City Mayor’s Office of Special Enforcement (OSE). The agreement follows the company’s abrupt shutdown in June after its peer-to-peer rental model was found to be in direct violation of local short-term rental laws.
The Collapse of a “Dating App” for Rentals
Launched in NYC in 2023 with backing from Blackbird, Kiki positioned itself as an Airbnb competitor designed to help renters sublet their apartments during extended travels. The platform utilized a unique matching system, similar to dating apps, to connect listers with renters based on personal preferences, promising users the ability to sublet their spaces for up to six months.
Violating Local Law 18
The startup’s business model collided with Local Law 18, enacted in 2022. This legislation restricts short-term rentals, requiring hosts to register with the OSE and remain physically present in the unit during the guest’s stay. Following the implementation of these rules, data from Inside Airbnb showed an 85% drop in short-term rental listings across the city.
Under the law, booking platforms are mandated to use the city’s verification system. Failure to verify transactions carries a penalty of $1,500 or three times the revenue earned per violation. The OSE reported that Kiki failed to submit mandatory quarterly transaction reports and neglected to verify nearly 400 individual rentals.
Regulatory Consequences
Christian Klossner, executive director of the OSE, stated that the settlement serves as a warning to other platforms. “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,” Klossner noted. While Kiki paid the settlement without admitting or denying the findings, a company spokesperson previously admitted to SmartCompany that they were aware of operating within a “gray regulatory area.”
Expansion to London Amid Legal Risks
Despite the financial and operational failure in the U.S. market, Kiki has moved forward with an official launch in London as of June. The startup now faces a new set of U.K. regulations, where illegal renting can result in severe financial penalties or even prison sentences of up to five years for non-compliance. Whether the company has successfully adjusted its model to avoid repeating the NYC outcome remains to be seen.