From tripadvisor:-
SCAMS AND HAZARDS: Most users of the NYC Forum will advise against short-term apartment rentals because many of the situations are scams (the apartment may not exist, or “bait-and-switch” tactics may be used), because of safety concerns (your ability to leave the building in case of fire, for example) and because of the possibility of eviction during your stay. Anyone can put photos and an ad on the internet. Keep in mind that "brownstone townhouses" are not like townhouses in the suburbs. They are usually over 100 years old and look it. Older buildings up to 5 stories high were not required to have elevators. Typical apartments in Manhattan are small, do not have much closet space and usually have very small bathrooms. That "open plan kitchen" in a "loft space" could mean that it's just a 450-square-foot (42 square-meter) one-room studio with a kitchen against the wall.
BUILDING RULES: Aside from local laws, many large apartment buildngs in NYC are condominiums or co-operatives (co-ops), and they are governed by rules about what their residents can and can not do. Most likely, their rules prohibit renting apartments to tourists on a weekly or daily basis. If the neighbors are fed up with a resident who has tourists coming in and out on a weekly basis, and if they don't want strangers to have copies of keys to the building, they will check with the super or management company to find out what's going on.
LOCAL LAWS: Short-term (less than a month) rentals of apartments in New York City violate various laws and building regulations. In general, renting an apartment to someone without a lease for less than 30 days at a time is illegal. The current local laws are confusing and often do not get enforced, but revised laws that are clearer take effect May 2011. Are there exceptions? Yes, especially for OWNER OCCIED buildings with 4 or fewer apartments, including the owner's apartment. But odds are the apartment vacation rental you're considering is NOT an exception. Check the DOB website above for building info, dont waste your time researching the internet until 3 in the morning trying to find that needle in NYC's housing haystack. Hosted stays in apartments or bed-and-breakfast accommodations present a different legal and regulatory situation. In Manhattan, though, these may cost about the same as hotel accommodations.
TYING UP THE HOUSING MARKET: Housing is already a hot commodity in NYC, and affordable housing in Manhattan is an endangered species. In the pursuit of higher rents and better income, some landlords illegally convert buildings into hotels. One can also make the argument that locals who hold leases on apartments they don't use creates an artificial real estate shortage and drives up rental prices. There are 3 million households in NYC. If even one half of one percent decides to rent out their lodging to tourists, that would take 15,000 living spaces off the market. Some might say your'e helping the economy, but for whom? There are lots of issues that follow in the wake of such rentals.
IMPACT ON LOCAL RESIDENTS: Most locals don't like having strangers coming and going in their place of residence. Even worse, some residents are innocently used as pawns in apartment scams, unbeknownst to them!
"I can't believe there are no legit vacation apartment rentals!"
Yes, there are some legit and legal ones out there, but they're hard to find and there's no way to tell from an ad or website what you're getting. Some newer buildings permit unit owners to rent or sublet on a daily or weekly basis because that was what was in demand in the early 2000s. A lot of new construction has happened in areas with new or revised zoning laws. Some fancy new apartment buildings can't even give away their units in this economy and have converted from condo to rentals. Etc, etc, yadda-yadda-yadda. But again, you'll just have to take it on faith that you're not breaking a rule, bothering neighbors or being scammed. To find out if you are renting in a building with illegal rentals complaints or any other type of building violations, use free interactive map of building violations published based on weekly data provided by the Department of Buildings.
"What's the worst that can happen?"
Here's the breakdown:
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Nothing. You rent, you come, you stay, you leave. You have no idea whether it's legal or not. Except for making the NYC housing market more difficult for locals, nothing bad happens to you.
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You rent, you come, you find the apartment not as advertised. It's not what you expected, you don't get homey service, and the managers are unresponsive. You didn't realize that most NYC apartments are old, small, unglamorous and not luxurious. You choose between staying or not, but getting a refund is unlikely, so you might be out what you have paid, etc.
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You rent, you come, there is no apartment. Or, there is an apartment that belongs to someone else. Or, the scammer is using a hotel's address. You are out whatever you have paid, you have to spend lots more to find a hotel.
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You rent, you come, you are thrown out of the building. If the place is part of an illegal hotel, it can be shut down by the FDNY or the NYPD. Seriously. Again, you are out what you have paid and have to find another hotel.
"But the website I used seems reputable and legitimate! And they advertise in guidebooks and on travel websites, too!"
Websites advertising short-term apartment rentals in New York City do not screen or verify the advertisements, and so they provide no guarantee of legality or conformance to building regulations. Therefore it is extremely difficult to recommend any apartment rental websites for New York City.
note: these websites often are legitimate. Housing laws in the USA are local laws, so the rules can differ from town to town. With over 25,000 cities, towns, etc. here it almost impossible for sites to know the local laws, so most rely on the person making the listing to know, and comply, with the law.
"But otherwise, I can't afford to visit NYC! I thought this was a free country? I'm helping locals make some extra money! And besides, what does this have to do with me?"
There are plenty of hotel deals to be had in NYC. And there are many apartment-style and suite hotels here, too. You can use a website like Better Bidding to decode Priceline's hidden hotels.