Now that the pandemic has all but cut off the steady flow of visitors, many European cities are seizing an opportunity to push short-term rentals back onto the long-term housing market
Representative Image (Venice, Italy, May 4, 2020) (REUTERS/Manuel Silvestri)
Raphael Minder and Geneva Abdul
Long before the coronavirus swept across Europe this spring, many cities had been complaining that a proliferation of short-term apartment rentals aimed at tourists through platforms like Airbnb was driving up housing costs for locals and destroying the character of historic districts.
Now that the pandemic has all but cut off the steady flow of visitors, many European cities are seizing an opportunity to push short-term rentals back onto the long-term housing market.
In Lisbon, the Portuguese capital, the city government is becoming a landlord itself by renting empty apartments and subletting them as subsidized housing. In Barcelona, Spain, the housing department is threatening to take possession of empty properties and do the same.
Other city governments are enacting or planning laws to curb the explosive growth of rentals aimed largely at tourists. Amsterdam has banned vacation rentals in the heart of the old city, a Berlin official warned of a crackdown on short-term leasing platforms “trying to evade regulation and the enforcement of law,” and Paris is planning a referendum on Airbnb-type listings.
For years, properties rented out for short-term stays have snatched away housing units from local residents in several European cities. Lisbon has more than 22,000 Airbnb listings, according to Inside Airbnb, which tracks listings in cities around the globe. Barcelona has 18,000, and Paris — one of the platform’s largest markets — has nearly 60,000.
When tourists are plentiful, renting a property on a short-term basis can be more lucrative for owners than a long-term tenant, something that city governments say has distorted housing markets in cities where supply is already tight. They also accuse online platforms of circumventing laws put in place to protect local markets.
“We cannot tolerate that accommodations that could be rented to Parisians are now rented all year to tourists,” the deputy mayor of Paris, Ian Brossat, said in a phone interview.
Brossat also said he was hoping to cut the number of days per year that a property can be rented through platforms like Airbnb — currently 120. He accused the company of breaching even that rule.
“Airbnb pretends to respect the law, but it’s not the case,” said Brossat, who has written a book critical of Airbnb and its impact on cities.
Airbnb denies any wrongdoing in Paris or elsewhere.
“They’ve set the rules, and we’re following the rules,” said Patrick Robinson, Airbnb’s director of public policy for Europe, the Middle East and Africa. “Where there is a vigorous discussion about the right regulations, we’re part of that conversation, and ultimately that’s for local politicians to decide.”
He said that Airbnb provided registration details and other data to authorities in major tourism hubs like Lisbon, Paris and Barcelona to help city officials enforce their rules.
“We actually think that better access to data is the solution here,” he said.
In September, the company introduced City Portal, which it says will allow governments access to data that can help identify listings that do not comply with local regulations, such as unregistered listings.
The most ambitious initiative is arguably the one in Lisbon, which has started signing five-year leases for empty short-term rental apartments. These properties are then sublet at lower prices to people eligible for subsidized housing. The city government has set aside 4 million euros, or about $4.7 million, for the first year of subsidies.
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“We entered the pandemic with a huge pressure on our housing market, and we cannot afford to exit the pandemic with the same set of problems,” said the city’s mayor, Fernando Medina. “This program is not a magic wand, but it can be part of the solution in terms of raising the supply of affordable housing.”
The program is aiming to attract 1,000 apartment owners this year and has drawn 200 so far. Medina said he was confident that the plan would meet its goal, since a rebound in tourism anytime soon seems increasingly unlikely as the pandemic drags on.
The plan has been welcomed by some neighbourhood associations that had criticized local politicians as allowing the city to become a playground for tourists and wealthy investors, many of them drawn to Portugal by residency permits and tax breaks offered to foreigners after the 2007-08 financial crisis.
“The coronavirus has helped expose the negative aspects of Portugal’s recovery from the financial crisis, which was driven by real estate and tourism rather than a focus on the basic needs of local people,” said Luís Mendes, an urban geographer who is a member of a citizens’ platform called Living in Lisbon.
Above all, Mendes said, the lockdown restrictions used to contain the coronavirus put the spotlight on the housing imbalances in Lisbon.
“How can you quarantine if you don’t have a decent house?” he said. “We now have a city hall that has put forward an interesting scheme and is at least aware that having a roof is a fundamental human right.”
However, some homeowners do not consider the city government a reliable tenant. Portugal, they say, has a history of legal uncertainty and sudden rule changes whenever a new administration takes office.
“If you look at the track record of the politicians in Lisbon, it’s an absolutely hopeless one of incompetence and often corruption,” said Rita Alves Machado, who owns three empty short-term apartments around Lisbon. “The city owes money all over the place, and I just don’t believe they will pay on time or stick to their own rules.”
The regulation of short-term rentals has been a drawn-out affair in Europe.
In September, the European Court of Justice backed cities attempting to crack down on short-term rentals, after supporting a French court ruling against two property owners illegally renting out second homes on Airbnb. The court had issued a ruling in Airbnb’s favour last year, saying that it was an online platform rather than a real estate company, which would have required it to comply with housing laws. The European Commission is taking further steps to regulate the platform and others through a new Digital Services Act, which aims to modernize the legal framework for such services across the European Union.
The longer the pandemic hinders travel, the more likely initiatives like Lisbon’s are to gain traction, city officials and local property experts say. In the meantime, Airbnb has found itself on shifting ground.
It has delayed plans for a stock exchange listing, cut $800 million in marketing costs, laid off 1,900 employees and raised $1 billion in emergency funding. Airbnb also dished out $250 million to hosts impacted by cancellations between March and May.
In Lisbon, occupancy rates for Airbnb and Vrbo, a short-rental booking site that was once known as HomeAway, dropped 50% in May from a year earlier, according to AirDNA, which collects vacation rental data.
Miguel Tilli, co-founder of HomeLovers, a Portuguese real estate agency, said he had been listing as many as 60 new properties a month in Lisbon — almost all of which had previously been rented through Airbnb but were now open to long-term tenants.
Rental prices in the city have dropped 10% since the start of the pandemic, but landlords who had previously let properties through Airbnb were still resistant to reducing rents.
“Many landlords are acting as if COVID is somebody else’s problem,” Tilli said. “That cannot last forever.”
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