CJEU sides with cities on short-term rental crackdowns

Europe: The Court of Justice of the European Union [ CJEU ] in Luxembourg has ruled in favour of municipalities looking to limit the impact of short-term rentals in their communities today.

The case upheld French laws which maintain that property owners should declare the renting of any second homes to city authorities. Short-term rental stays in Paris are also capped at a maximum of 120 days a year.

A dispute between the city and two Parisians who rented out their second studio apartments on Airbnb without disclosing was the core of the hearing. Judges declared that the law was justified as it was “proportionate, limited in scope, and did not cover the rental of primary homes”.

The CJEU ruling read: “National legislation making the repeated short-term letting of accommodation to a transient clientele which does not take up residence there subject to authorisation is consistent with EU law. Combating the long-term rental housing shortage constitutes an overriding reason relating to the public interest justifying such legislation.”

There are some suggestions among Parisians that this may open the doors for additional regulation from cities hoping to limit the growth of short-term rentals, with a number of municipalities pointing the finger at the asset class for supposedly exacerbating housing shortages in city centres and out-pricing lower-income citizens.

Amsterdam has been one of the most high-profile case studies in Europe for restricting short-term rental operations in its city. The city has implemented an outright ban on holiday rentals in three of the most popular tourist districts, and a city court ruled that Airbnb’s fee collection model was illegal.

Airbnb was not the sole party in this case but the platform noted that the ruling will not affect it heavily in Paris. Most of its rental listings in the city are in primary homes, but whether that proportion is similar in other cities is unclear.

The company told Reuters: “We welcome this ruling that will help clarify the rules for hosts who share secondary home in Paris. We look forward to working closely with local authorities on proportionate regulation that puts local families and communities first and works for all.”

Last December, in a landmark case, the CJEU ruled that Airbnb was to be classified as an “information society service” rather than as a property broker. As a result, it was determined that the platform would not require an estate agent’s licence to continue operating in France.

Meanwhile in July of this year, long-time Paris mayor Anne Hidalgo pledged to hold a referendum on Airbnb and other platforms’ short-term rental operations in the city in the autumn, as part of her six-year plan to lead the post-Covid recovery.

By holding the non-binding referendum, the French-Spanish politician was aiming to free up more residential accommodation in the capital as she believes many Parisian residents are being priced out of the rental market.

In light of the CJEU decision, Ian Brossat, Paris’ deputy mayor in charge of housing and accommodation, called the ruling “a beautiful victory” for the city and told news network France 3 Paris that the Mairie was not “fighting a war against Airbnb or short-term tourism accommodation platforms but fighting a battle for Parisians’ housing”.