The European proposal on short-term rentals is long overdue

The European Commission’s proposal to regulate the short-term rental market, dominated by platforms such as Booking and Airbnb, has faced repeated delays. The EU is expected at the turn.

Originally scheduled for June 2022, the proposal has been pushed back to October, and will likely be pushed back further to mid-November. The public consultation received close to 5,700 responses, indicating great attention to the proposal.

In July, a coalition of mainly centre-left MEPs and several European cities wrote to the European Commission to reiterate the urgency of regulatory action at EU level following the uncertainty surrounding the proposal.

“The Commission is currently working on a specific legislative proposal to further increase transparency in the short-term accommodation rental sector, as part of its efforts to promote a balanced tourism ecosystem”reads the Commission’s response, dated 15 September.

The costs and benefits

“The expansive growth in the rental of short-term holiday accommodation in cities and popular tourist destinations is taking accommodation off the market, driving up prices and negatively impacting livability in European cities”Kim van Sparrentak, the MEP behind the letter, told EURACTIV.

Travel platforms, for their part, point out that they have brought substantial economic benefits to cities by contributing doubly to the booming tourism industry. Landlords can access international customers with low transaction costs, while consumers can easily research and compare accommodation options, they argue.

The letter was co-signed by some members of the Alliance of European Cities for Short-Term Rental, including the mayors of Paris, Budapest, Amsterdam, Florence, Brussels and Barcelona.

For the administrators of these high places of tourism, the rise and high profitability of short-term rentals have led to the “tourism” cities, a phenomenon that robs traditional neighborhoods of their character and weakens the supply of long-term rentals.

On the other hand, platforms like Airbnb note that, since the Covid-19 pandemic, tourist flows have tended to get away from city centers, especially thanks to the long-term stays of people working remotely. The economic benefits are therefore dispersed in less populated areas.

Transparency

Where cities have introduced rules in this market, for example limiting the number of days an apartment can be rented, local authorities say they do not have access to relevant information to enforce the rules, such as the number of nights rented.

They have therefore invested in either verifying rental data through alternative means or in investigating suspected illegal rental activities. Barcelona currently employs 70 people on these topics specifically.

On the other hand, technology companies point out that they already provide aggregated data to the EU statistics agency, EUROSTAT. However, at this level, it is impossible to assess things such as occupancy, since many hosts offer their offers on different platforms. Personal data is necessary for a more accurate assessment, which requires specific safeguards.

In some cases, local authorities have requested bulk data in order to identify illicit behavior. In 2019, a German state court ruled rejected a request from Munich, considering that widespread disclosure was disproportionate and that individual cases should be strongly reasoned.

“Airbnb shares data with governments and tax authorities across Europe, including France, Greece and Spain”said Georgina Browes, head of European affairs at Airbnb. “Our EU Host Action Plan includes proposals for a centrally managed EU database to report host activity to Member States. »

Legislation is expected to introduce a mandatory data sharing system intended to provide legal clarity on what kind of data could be requested and on what legal basis.

Adaptation to local reality or harmonization?

Travel platforms, meanwhile, could benefit from streamlining local rules, which have become increasingly complex and fragmented, even within the same country. Because of this, the platforms find themselves in charge of monitoring the market and thus jeopardize legal certainty.

“The new rules should leave sufficient flexibility for local authorities to retain measures specific to the needs of the territory, for example with regard to the operation of the registration systems already in place”said Federica Bordelot, policy adviser at Eurocities, a network of cities.

Following the condemnation of SCI Cali Apartments, in 2017, by the Paris Court of Appeal to pay a fine for having offered its studio for rent to transient customers, “without prior authorization and repeatedly”the Court of Justice of the European Union (CJEU) ruled that local authorities may intervene in the housing market to prevent long-term housing shortages, in accordance with the principles of proportionality and necessity.

In the forthcoming proposal, the Commission is invited to define how these principles should be implemented and within which framework local authorities can act.

Rentals between peers or professionals

The platforms point out that the short-term rental market allows people with a vacant room or apartment to secure additional income. They therefore push to make a distinction between peer-to-peer rentals and professional rentals.

“The distinction between peers and professional users is not relevant for cities. Short-term rental regulations must help protect the public interest and must be respected regardless of the nature of the host. The distinction is also very difficult to prove in practice”specified Mrs Bordelot of Eurocities.

Furthermore, the cities argue that most of the market offers come from companies and investors with large portfolios. Conversely, tech platforms claim that heavy bureaucracy keeps amateur hosts out of the market.