With Trip Leases Empty, European Cities See a Probability to Reclaim Housing
LISBON – Long before the coronavirus spread across Europe this spring, many cities had complained that an increase in short-term rental apartments for tourists via platforms like Airbnb was driving up housing costs for locals and destroying the character of historic neighborhoods.
Now that the pandemic has almost disrupted the steady stream of visitors, many European cities are taking the opportunity to bring short-term rents back into the long-term housing market.
In Lisbon, the Portuguese capital, the city government itself becomes the landlord by renting empty apartments and sub-letting them as subsidized apartments. In Barcelona, Spain, housing authorities are threatening to take vacant lots and do the same.
Other city governments are enacting or planning new laws to curb the explosive growth in rents, which are primarily aimed at tourists. Amsterdam has banned holiday apartments in the heart of the old town; A Berlin official warned against action against short-term leasing platforms, “which try to evade regulation and the enforcement of laws”. and Paris is planning a referendum on Airbnb listings.
Properties that are rented for short-term stays have been putting pressure on the housing markets in several European cities for years. According to Inside Airbnb, Lisbon has more than 22,000 Airbnb entries tracking entries in cities around the world. Barcelona has 18,000 and Paris – one of the platform’s largest markets – has nearly 60,000.
When there are many tourists, renting a property for the short term can be more lucrative for the owner than for a long-term tenant. According to city governments, this has distorted housing markets in cities where supply is already scarce. They also accuse online platforms of circumventing laws that were made to protect local markets.
“We cannot tolerate that accommodations that could be rented out to Parisians are now rented out to tourists all year round,” said Paris’ deputy mayor Ian Brossat in a telephone interview. Mr Brossat also said he hopes to reduce the number of days per year that a property can be rented through platforms like Airbnb – currently 120. He accused the company of breaking that rule itself.
“Airbnb pretends to respect the law, but it doesn’t,” said Brossat, who wrote a book criticizing Airbnb and its impact on cities.
Airbnb denies any wrongdoing in Paris or elsewhere. “You set the rules and we follow the rules,” said Patrick Robinson, Airbnb director of public order for Europe, the Middle East and Africa. “Where there is a heated discussion about the right rules, we are part of that conversation and it is ultimately up to local politicians to decide.”
He said that Airbnb had provided registration and other data to authorities in key tourism centers such as Lisbon, Paris and Barcelona to help city officials enforce their rules. “We actually believe that better access to data is the solution here.” In September, the company launched the City Portal, designed to give governments access to data that can be used to identify entries that do not comply with local regulations, such as: B. unregistered entries.
The most ambitious initiative is arguably the one in Lisbon, which started with the signing of five-year contracts for empty short-term rental apartments. These properties are then sublet at lower prices to people who are eligible for subsidized housing. The city government has allocated € 4 million, or around $ 4.7 million, for the first year of the subsidy.
“We entered the pandemic with tremendous pressure on our real estate market and we cannot afford to end the pandemic with the same problems,” said City Mayor Fernando Medina. “This program is not a magic wand, but it can be part of the solution to increase the availability of affordable housing.”
The program aims to attract 1,000 homeowners this year and has attracted 200 so far. Mr Medina said he was confident the plan would achieve its goal as tourism recovery looks unlikely anytime soon as the pandemic drags on.
The plan was welcomed by some neighborhood associations who criticized local politicians for turning the city into a playground for tourists and wealthy investors. Many of them were drawn to Portugal after the 2007/08 financial crisis through residence permits and tax breaks for foreigners.
“The coronavirus has helped expose the negative aspects of Portugal’s recovery from the financial crisis, which has been driven by real estate and tourism rather than focusing on the basic needs of the local people,” said Luís Mendes, an urban geographer who is a member of a citizens’ platform called Living in Lisbon.
Most importantly, Mr Mendes said, lockdown restrictions to contain the coronavirus have put the focus on housing imbalances in Lisbon. “How can you quarantine if you don’t have a decent house?” he said. “We now have a town hall that has presented an interesting scheme and is at least aware that a roof is a basic human right.”
However, some homeowners don’t consider the city government a reliable tenant. Portugal has a history of legal uncertainty and sudden rule changes when a new government takes office.
“If you look at the track record of politicians in Lisbon, it is absolutely hopeless, incompetent and often corrupt,” said Rita Alves Machado, who owns three empty short-term apartments near Lisbon. “The city owes money everywhere and I just don’t think they’ll pay on time or follow their own rules.”
The regulation of short-term rents has been a lengthy affair in Europe.
In September, the European Court of Justice backed cities trying to fight short-term rents after backing a French court ruling against two owners who illegally rent second homes on Airbnb. The court ruled in favor of Airbnb last year, stating that it was more of an online platform than a real estate company that had demanded compliance with housing laws. The European Commission is taking further steps to regulate the platform and others through a new law on digital services, which aims to modernize the legal framework for such services across the European Union.
The longer the pandemic hinders travel, the more likely it is for initiatives like Lisbon’s to take off, city officials and local real estate experts say. In the meantime, Airbnb has found itself on new ground.
In Lisbon, Airbnb and Vrbo, a short-term rental website once known as HomeAway, dropped 50 percent year-over-year in May, according to AirDNA, which collects vacation rental data.
Miguel Tilli, co-founder of HomeLovers, a Portuguese real estate agency, said he was listing up to 60 new properties in Lisbon per month – almost all of which were previously rented through Airbnb but were now long-term renters.
Rental rates in the city have fallen 10 percent since the pandemic began, but landlords who previously rented properties through Airbnb have still been resistant to rent cuts.
“Many landlords pretend Covid is someone else’s problem,” said Tilli. “It can’t last forever.”
Raphael Minder reported from Lisbon and Geneva Abdul from Paris.