Short-term rentals: Gold mine or housing catastrophe?

The low-cost tourism revolution and the explosion of collaborative industries and apps have brought about a new way of travelling that has reached every corner of the world, especially urban areas. Although tourism holds great economic benefits, this transformation has placed pressure on local government and their communities – by hiking the price of housing and limiting the availability of residential rental properties, among other reasons. Now, several councils of popular capital cities have explored solutions to mitigate the impact:

Amsterdam, Netherlands

Amsterdam was one of the pioneer cities in regulating tourist rentals. In 2014, the Council signed an agreement with Airbnb that ensured they were responsible for the behaviour of their users and helped collect the tourist tax.

The city council then created a permanent and well-resourced municipal team to prosecute infringements by platforms and landlords and an anonymous hotline to register nuisances and irregularities. The city has revised these agreements on multiple occasions to toughen fines and demands on the platforms. Inspectors can impose fines of up to €20,500 for each illegal accommodation. In addition, individual landlords are restricted to renting out rooms or houses to tourists for only 30 days a year and never to groups over 4 people – always notifying the city council.

Amsterdam has the advantage of having an important stock of public housing with reduced rent in which subletting and shortterm renting is always illegal. This distinction is important since obtaining licenses to rent social housing is increasingly difficult for middle-class individuals and families.

Barcelona, Spain

Since the Olympic Games in 1992, Barcelona became one of the most visited cities in the world. Private vacation rentals became a goldmine for some landlords in the city following a municipal decision to grant unlimited holiday let licenses in 2014. This decision worsened an already precarious housing situation, triggering large social displacement.

The city council adopted new regulations and restrictions and strengthened regulations on hotels and traditional tourist houses. They successfully lobbied the regional government to make illegal most Airbnb listings and now vacation flats must be registered with local government, meet strict quality and habitability criteria and offer a baseline of services to the visitors. They also created a website for visitors to check if they are staying in a legal flat and how to report any wrongdoings.

Owners of illegal tourist flats face hefty fines and must pay for the expenses of their guests for the remainder of their stay. Although these measures have focused on landlords, they have also repeatedly fined platforms such as Airbnb and HomeAway for publishing thousands of unauthorised holiday flats on their platform. Like Amsterdam, Barcelona holds the platforms responsible for collecting tourist tax. Also, both cities have limited the number of active licenses in centric and historical neighbourhoods.

London, England

London has been navigating a severe housing crisis for a while and unfortunately, the plans to combat the crisis have so far failed to deliver. On the one hand, councils have embarked on an ambitious campaign to build public housing and purchase former public housing for affordable rentals. On the other hand, current legislation on tourist rentals has failed to stop 7% of all properties in the Greater London Area from being rented out as illegal tourist apartments.

The current regulations require a tourist license for those who want to rent their property for periods of more than 90 days a year – yet, this only applies to those wanting to rent the entire apartment, opening the doors for potential loopholes. Plus, accommodation quality standards are not clearly set by this regulation.

Local government in the Greater London Area recognise they don’t have the necessary means to enforce such registrations effectively due to the strength of the market and their shrinking resources. For a city that attracts over 20 million tourists a year, this dynamic of uncontrolled tourist flats puts enormous pressure on the housing system and local services; it is also a missed opportunity to raise tourism taxes and invest in a more sustainable tourism model.