Cities could have a new legal tool to crack down on short-term rentals and long vacancy properties under new EU rules being proposed today to alleviate the housing crisis.
The rules will clarify if measures by local authorities to restrict short term or holiday rentals, often managed through Air BnB, clash with EU law.
Local authorities will have to prove that a concentration of short-term rentals are creating housing availability pressures.
Under the free movement of services at EU level, there are rules prohibiting or limiting any restriction of services, including the provision of housing.
However, the European Commission today acknowledged that the services directive only provides very general guidance on how it applies to any restrictions on short term or holiday rentals.
The Commission said that the increasing use of housing for purposes other than for the primary residence “can aggravate local availability and affordability” in some cities, especially popular tourist destinations.
Public authorities will have legal certainty, European Commission says
Under today’s proposed Affordable Housing Act, the Commission said that public authorities will have legal certainty when they act against short-term rentals, “based on local specificities”.
The Commission pointed to the latest Eurobarometer survey, which shows that over 50% of city dwellers across the EU consider housing as an immediate and urgent problem where they live.
“The housing crisis also weakens our competitiveness, by limiting labour and educational mobility. Therefore, it is essential to address it,” said a statement.
The Commission said that the European Court of Justice has recognised that housing affordability objectives can be an overriding public interest in justifying restrictions on short-term rentals, including the landmark Cali Apartments case, in which a real estate company renting studios in Paris on a short-term through an internet platform lost a court case over their lack of prior authorisation from the local authorities.
According to a senior EU official: “Existing rules under the Services Directive mean that you can’t discriminate [against a housing service provider]; you need to have necessity and proportionality.
“But these principles are only very generally described. If you have a look at the Services Directive, it’s just a very short listing, so more specificity and clarity is needed.”
The Commission says a number of member states had already acted against short term rentals to ease housing pressures in cities but faced legal challenges over whether such restrictions were compatible with EU law.
European Commission President Ursula von der Leyen, who flagged the legislation in her State of the Union speech last September, said: “Lack of affordable housing is a matter of concern for so many of our European citizens.
“Essential workers and students cannot afford to live where they serve and study. But most importantly, it is about fairness. Today, we are delivering for all Europeans.”
The Act, which will have to be agreed by member states and the European Parliament, will not change competences when it comes to housing, meaning the decision on whether or not to act against short term or holiday rental operators – or vacant dwellings – in cities where there are housing pressures will be left to local or national authorities.
The Act will set out a common methodology to help local authorities identify “areas under housing stress”.
Those authorities restricting short-term rentals will have to “show that this contributes to local housing pressures and ensure that any measures are targeted, necessary and proportionate,” according to a statement.
Local authorities must also show that short term rental activity has had a significant adverse effect on housing affordability for “at least three years”.
The Act is also designed to provide clarity around EU law when it comes to local authorities taking action against second homes or prolonged vacancy.
“Investors and property owners operating across several local markets will benefit from more clarity on the EU legal framework,” said a statement.
Welcoming the proposal, Dublin MEP and a member of the European Parliament Housing Committee Aodhán Ó Ríordáin said: “This regulation moves beyond the previous EU rules on short-term rentals, that were limited purely to data collection.
“Now, for the first time, the EU is providing a legal framework for national and local authorities to restrict the unsustainable growth of short term rentals in cities across Europe.”
He added: “This is the result of sustained pressure from the Socialists and Democrats Group, Labour’s European Parliament Grouping, in putting housing firmly on the EU agenda for the first time.
“We cannot allow for a situation to exist where tourists are staying in houses on Airbnb while families are living in hotels that have been turned into emergency accommodation.
“That is the reality in Dublin right now, and it is obscene.
“This Act gives local and national authorities power to tackle the proliferation of short-term rentals, vacant homes and non-primary residences that are hollowing out our housing stock.”