EU Vacation Rental Regulations: Single Rules Considered

EU Considers Regulation of Short-Term Rental Market

Legislators within the European Union are currently engaged in discussions regarding the regulation of the short-term rental sector throughout the bloc. The central question revolves around whether a unified, pan-EU regulatory framework is necessary, or if a more localized approach, tailored to individual member states, would be more effective for platforms such as Airbnb.

Balancing Competition and Local Laws

The Commission has expressed its desire to foster increased competition and the emergence of new participants within the sector. Simultaneously, it acknowledges the importance of respecting EU law, which permits Member States to implement local regulations based on concerns deemed to be in the public interest.

A Patchwork of Existing Regulations

Currently, a fragmented landscape of rules and regulations governs short-term rental platforms across Europe. This situation has arisen as cities attempt to manage the effects of over-tourism, fueled by the expansion of platforms like Airbnb. Furthermore, these cities face challenges in obtaining valuable data from platforms whose business models rely on converting local housing into short-term rental properties.

Concerns Over Single Market Fragmentation

This inconsistency is prompting the Commission’s typical concerns regarding the fragmentation of the Single Market. Consequently, it is now soliciting feedback from industry stakeholders and interested citizens to determine if sector-specific regulation is warranted.

Commission's Objectives for Short-Term Rentals

In a summary outlining its intentions for the upcoming short-term rental (STR) initiative, informed by responses to the public consultation, the Commission states its goal is “to develop responsible, fair and trusted growth in short-term rentals, as part of a well-balanced tourist ecosystem”. It also aims “to ensure a level playing field for all accommodation service providers and to respond to requests from interested parties for EU-wide action in this area”.

The Commission adds that this will involve “offering balanced solutions for cities, peer and professional short-term rental providers and platforms, while benefiting in particular small and medium-sized firms”.

Digital Services Act and its Limitations

Last year, the Commission proposed comprehensive rules for the digital sector under the Digital Services Act (DSA). This regulation aims to create a more equitable playing field between online and offline businesses, particularly concerning illegal content and goods.

However, the DSA has faced criticism for not adequately addressing the issue of illegal holiday rentals.

Industry Calls for More Ambitious Regulation

In a position paper released earlier this year, Booking.com argued that the Commission’s proposal could be more “ambitious,” stating it “insufficiently addresses illegal short term holiday rentals”.

“The powers for national (or local) authorities to order platforms to remove illegal content (Article 8) and to share information (Article 9) are a step in the right direction. However, enforcement loopholes remain,” it added. “Where short term vacation rentals are subject to an authorization /registration scheme, platforms should be required to ensure that only properly registered / authorized properties are listed. This aligns with the duty of care incumbent upon platforms.”

Pressure from Heavily Touristed Cities

The Commission is also experiencing significant pressure from heavily touristed cities across Europe, which are attempting to limit the growth of holiday rentals, often with limited success.

Recent Court Cases and Legal Battles

For instance, a court in Amsterdam overturned a three-district ban on rentals through platforms like Airbnb, which city authorities had implemented following a local resident poll regarding community impacts. Conversely, Paris authorities recently won a significant case against Airbnb, resulting in a $9.6 million penalty for illegal listings.

Data Access and Transparency

European governments are also urging the Commission to mandate data access to vacation rental platforms. Last year, the Netherlands proposed incorporating such provisions into the DSA.

European Parliament Concerns

The European Parliament has cautioned that the “expansive growth of short-term holiday rental in cities and popular tourist destinations is extracting housing from the market, driving up prices and has a negative impact on liveability”. MEPs also stated in a report last year: “We want to give cities more control over rentals short term accommodation platforms and ensure that these platforms share information with the cities, respecting data protection rules.”

Voluntary Agreements and Their Shortcomings

Last year, the Commission reached a voluntary agreement with several major platforms to share some aggregated data. However, this agreement falls short of the requirements that some European cities have already imposed on STR platforms operating within their jurisdictions to manage community impacts.

Current Regulatory Approaches Across the EU

In its consultation on the STR issue, the Commission acknowledges that numerous authorities across the EU have taken steps to regulate short-term rentals (STRs). These measures include implementing registration and authorization schemes for hosts, and setting limits on the number of nights per year a property can be rented.

“Whilst doing so, some national rules make a difference between so-called ‘peers’ offering STRs in a private capacity occasionally, and those offering STRs in a more professional capacity,” it goes on. “Criteria differ however and not everywhere a distinction is made between peers and professionals. Authorities have also taken a variety of measures to obtain better data from platforms, with a view to better assessing the volume of STRs and facilitating law enforcement.

“The foregoing has resulted in a patchwork of varying rules and regulations.”

Legal Basis for Restrictions

“Under EU law, imposing restrictions and conditions on the provision of a service can be justified if necessary to pursue a legitimate public interest objective and proportionate to achieve that end. In spite of important clarifications offered by EU case law, there is still much uncertainty regarding the measures authorities may adopt and enforce as regards hosts and other service providers such as platforms,” the Commission adds.

Need for Sector-Specific Regulation

“EU horizontal regulatory initiatives such as the Digital Services Act aim to impose harmonised obligations on online platforms, including collaborative economy platforms in the area of STRs. However, in order to foster a balanced development of the STR segment in the EU and to address the sector-specific aspects, a dedicated sector-specific initiative may be needed.”

Consultation Questions and Stakeholder Input

The Commission’s position on this complex issue remains unclear. However, its consultation presents a series of questions for stakeholders, focusing on transparency, data access, and the advantages and disadvantages of STRs.

The Commission is also soliciting suggestions for specific rules and regulations that could balance tourism support with local public interests, including defining the distinction between a “peer” host and a professional operator.

The Promise and Reality of "P2P" Platforms

Platforms like Airbnb often market themselves as offering unique and characterful spaces from local hosts, differentiating them from traditional hotels. However, these “P2P” platforms quickly attracted professional landlords who could profit from listing entire apartments to tourists, rather than offering long-term rentals to locals at lower rates. This has led to criticism that STRs erode local communities and increase the cost of living in cities. 

Potential Regulatory Measures

One question in the Commission’s public consultation asks for views on the types of rules and requirements for STRs that “could be acceptable”. Suggested responses include registration and authorization obligations for all hosts or only professional hosts, and limits on the number of nights, income generated, and rooms rented by peers.

The consultation also asks for a response to the suggestion of a “total ban on STRs”.

Harmonization vs. Local Control

Elsewhere, the consultation seeks opinions on whether STR rules should be imposed uniformly across the EU (a “harmonized EU approach”), left entirely to local authorities, or a combination of both.

Airbnb's Lobbying Efforts

Airbnb has been lobbying for pan-EU rules on short-term lets, arguing in an open letter earlier this month that EU-wide regulations would “provide more stable and consistent guidance for governments and support for communities recovering from the impact of the COVID-19 pandemic”.

Defining "Peer" vs. "Professional" Hosts

The Commission is also grappling with whether different rules should apply to peer and professional hosts, and if so, how to best define these categories.

Other questions in the consultation ask for views on measures “that you think could support innovation in the STR and the development of new business models”. 

Timeline for Legislative Proposal

The Commission’s consultation is open until December 13, with plans to publish a legislative proposal for vacation rentals in the first half of next year.

This report was updated to include details of Airbnb’s lobbying on the issue