EU considers single rules for regulating vacation rental platforms

 EU considers single rules for regulating vacation rental platforms

European Union lawmakers are consulting on how to regulate the short-term rental market across the bloc — asking whether a single set of pan-EU rules or something more locally flavored is needed to rule over platforms like Airbnb.

The Commission says it wants to support an expansion of competition and players in the sector but also respect EU law which allows for Member States to apply local rules based on concerns that are in the public interest.

As it stands, a patchwork of rules and regulations has grown up around short-term rental platforms across Europe as cities grapple with the impact of over-tourism from uncontrolled growth of Airbnb et al. — and also struggle to extract useful data from platforms whose business model benefits from flipping local housing stock to drive short-term rental gains.

This dynamic is triggering the Commission’s customary anxiety around fragmentation of the Single Market. So it’s now asking for views from the industry and interested citizens as it considers whether a sector-specific regulation is needed.

In a summary of its intention for the forthcoming short-term rental (STR) initiative, which will be fed by responses to the public consultation, the Commission writes that its aim is “to develop responsible, fair and trusted growth in short-term rentals, as part of a well-balanced tourist ecosystem” — and “ensure a level playing field for all accommodation service providers and to respond to the many requests from interested parties for EU-wide action in this area”.

“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,” it adds.

The Commission proposed broad rules for the digital sector at the back end of last year — under the Digital Services Act (DSA) — which it has said will level the playing fields between online and offline business in areas such as illegal content and goods.

However the regulation has been criticized for not going far enough to tackle illegal holiday rentals.

In a position paper earlier this year, for example, the holiday accommodation booking platform, Booking.com, wrote that the Commission’s proposal could be more “ambitious” — saying 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 is in line with the duty of care incumbent upon platforms.”

The Commission is also facing vocal pressure on the issue from heavily touristed cities across Europe — which have been trying to impose limits on the growth of holiday rentals, with mixed success.

Earlier this year, for example, a court in Amsterdam overturned a three-district ban on rentals on platforms like Airbnb which the city authorities had brought in after polling local residents over the impacts on their communities.

But this summer city authorities in Paris trumpeted winning a major case against Airbnb — which was ordered to pay $9.6 million for illegal listings.

Governments in Europe have also been pressing the Commission to regulate for data access to vacation rental platforms, with the Dutch suggesting last year that it should embed such provisions in the DSA.

The European Parliament has also warned 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”. And in a report last year MEPs also said: “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.”

Also last year the Commission inked a voluntary agreement with a handful of major platforms to push some aggregated data. However the agreement goes considerably less far than requirements that some individual European cities have imposed on STR platforms operating locally in a bid to control their impacts on communities.

In its consultation on the STR issue, the Commission notes that a number of authorities across the EU have taken steps to try to regulate short term rentals (STRs) — such as by imposing registration requirements and authorisation schemes on hosts, and by putting limits on the number of nights per year properties can be rented out.

“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.”

“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.

“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.”

It’s not clear exactly where the Commission will plant its flag on this contentious issue — but its consultation poses a number of questions for stakeholders to respond to in areas such as transparency and data access, as well as asking for views on the benefits and drawbacks of STRs.

The Commission is also seeking suggestions for specific rules and regulations that might be applied to STRs to achieve the sought for balance between supporting tourism and respecting local public interest — including asking for views on how best to ascertain whether an STR host is a “peer” or a professional operator.

The marketing of platforms like Airbnb typically spins the promise that you’re renting unique and characterful spaces from locals — which differentiates the holiday rental platform business from more traditional tourist fare like hotels.

However the reality of such “P2P” platforms is they quickly attracted a swathe of professional landlords — who could lucratively list and rent entire apartments to tourists, instead of renting the housing at a lower rate to locals on long term contracts. Hence the criticism that STRs hollow out local communities and make city living less affordable for locals. 

In one question from the Commission’s public consultation — which is asking for views on the type of rules and requirements for STRs that “could be acceptable” — it suggests a number of responses, including registration and authorization obligations on all hosts or only on professional hosts; and limits on the number of nights, amount of income generated and number of rooms that can be rented by peers.

At the end of this list it also asks for a response to the suggestion of a “total ban on STRs”.

Elsewhere, the consultation asks for views on whether rules for STRs should be imposed from the top (a “harmonized EU approach) — or allowed to be entirely bottom up (left to local authorities to define) or some vaguely defined combination of the two.

It is also concerned with whether there should be different rules for peers and professional hosts — and if so how best to define who is a peer and who a professional?

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”. 

The Commission’s consultation runs until December 13, with the EU’s executive slated to publish a legislative proposal for vacation rentals in the first half of next year.

Related post