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European cities move to restrict Airbnb rentals

Housing protest in Edinburgh
I just want to live. Source: Reuters

European cities are imposing increasingly draconian restrictions on Airbnb rentals, accusing the US home-sharing platform of exacerbating housing shortages, undermining hotel regulations and encouraging tax evasion.

Barcelona, which has become one of the world’s top tourist destinations, is leading the way, requiring flat owners to register and for Airbnb to provide information on the renters under penalty of a €600,000 fine ($680,000).

Berlin is also a top tourist destination, but, in the grand tradition of Prussian bureaucracy, things are going much more slowly there. Each district in the city has its own set of requirements for registration, ranging from authorization of apartment owners to gasoline receipts that can prove a renter is only temporarily offering their abode to outsiders. As a result, only 760 of an estimated 25,000 Airbnb rentals have actually registered.

Culprits or victims?

In fact, Berliners traveling abroad avail themselves of some 730,000 Airbnb rentals annually, against the 710,000 guests they host, so that on balance they are more often culprits than victims if the practice is truly considered predatory.

But one bona fide victim recently told her story on German television. Monika Drebold had lived half her life in a Hamburg apartment until she was given notice by the owner, who claimed he now needed it for himself. She learned later from former neighbors that the owner instead was renting it out short-term at much higher rates on Airbnb. “My world has collapsed,” the retiree told state-owned WDR.

“The current legal vacuum and the resulting distortion of competition comes not only at the expense of the heavily regulated hotel industry,” complained Markus Luthe, head of the hotel association, “but also at the expense of consumers, residents and taxpayers.”

Officials in Hamburg and North Rhine-Westphalia are seeking information about Airbnb renters because they suspect tax evasion on a massive scale with the rental income. The 3.2 million Airbnb rentals in Germany last year, with an average stay of 4.2 days and an average price of €60, brings that revenue close to a billion euros.

Combating “overtourism”

Cities across Europe are taking action. Paris limits the annual maximum for rental to 120 days, while London restricts it to 90 days. Amsterdam is cutting its current maximum of 60 days in half at the turn of the year. Palma de Mallorca has banned Airbnb rentals altogether.

It’s no coincidence that the cities leading the action against Airbnb are among those most plagued by “overtourism.” The volume of tourists has begun to significantly deteriorate the quality of life for residents. Complaints about the availability of housing is one aspect of this.

Airbnb and its renters are fighting back. The European Holiday Home Association has lodged a complaint with the European Commission in Brussels, arguing that actions taken by some cities are an inordinate intervention in the single market and in some case violate basic property rights.

The commission in principle is in favor of the so-called “sharing economy” exemplified by Airbnb, but at the same time wants to protect consumers. Consumer commissioner Vera Jourova has demanded Airbnb increase transparency about charges and renters.

Hardline approach winning out

Denmark opted for a less confrontational approach and the San Francisco-based firm offered to pass on data about renters’ revenue and to limit residences to a maximum of 70 days. In return, the Danish government exempts €3,700 equivalent in short-term rental income from taxes.

But Barcelona’s hardline approach seems more likely to win out. New York City officials are studying the policies of the Catalan capital as they formulate their own restrictions on Airbnb. The city council voted unanimously last month to restrict short-term rentals, which are largely illegal in the city anyway.

Airbnb, for its part, says it has nothing against regulation. “Airbnb is in favor of up-to-date regulations, that take into account the interests of everyone,” cofounder Nathan Blecharczyk told Handelsblatt, noting that the company works with cities all over the world. “We have concluded partnerships with 400 of them.”

Christoph Schlautmann covers tourism for Handelsblatt. Katharina Kort is a correspondent in New York. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: schlautmann@handelsblatt.com and kort@handelsblatt.com.

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