> I assume that the people illegally subletting their apartments don't just work in the tech industry.

People subletting their apartments aren't subletting rent-controlled apartments, by and large. This doesn't apply in other cities, but in NYC, any listings you see on AirBnb are almost certainly for unregulated apartments.

> According to [1], in 2011 about 47% of NYC housing units were rent-regulated.

73% of those (34% of total apartments) are pre-1947, which are regulated, but most of those are under a separate provision, which means they aren't subject to the same restrictions as what we're talking about here.

I live in Prospect Height in Brooklyn, at the very edge of gentrification where rent is booming on one site of the street and cheap on the other. The people that live above me (they have been on the lease for 30+ years, so they have cheap rent) have been illegally subletting their apartment for months now to a group of 20 or so loud and unruly people. We know this because the landlord tried to evict them and hired a private investigator to look into the situation. The thing is, no matter how much we complain about them being loud, they still pay their bills on time, so my landlord has been at a loss as to how to remove them. He would love to kick them out and renovate the apartment and charge many times as much as is currently being paid, but he can't.

My point is, rent-controlled apartments are being subletted. The situation in my building is not a fringe case. Craigslist and word of mouth illegal subletting is common. AirBnB is not the only name in the illegal subletting game in NYC, but they are the only name in luxury illegal sublets.

> The thing is, no matter how much we complain about them being loud, they still pay their bills on time, so my landlord has been at a loss as to how to remove them. He would love to kick them out and renovate the apartment and charge many times as much as is currently being paid, but he can't.

If they are rent-controlled, even if they are paying their rent, he can evict them with no problem.

The relevant government agencies have a moderate amount of information line, but I'd recommend calling them instead. I've done this before; they're very friendly and helpful if you call them on the phone. I'd recommend giving them a call and asking for advice on the eviction process:

http://www.nyshcr.org/rent/ http://www.housingnyc.com/html/about/about.html

The problem is rent control - get rid of that and the market distortion goes away.