The lack of available housing in tourist destinations, rising rental prices, and the impact on the lives of local residents are some of the negative consequences of short-term rentals that have significantly increased in recent years, thanks to the expansion of online platforms such as Booking, Airbnb, Expedia, and TripAdvisor. Additionally, in Croatia alone, 55,000 new beds for tourist rentals were registered last year, mostly in private properties.
In the EU, 547 million overnight stays were booked on the four mentioned platforms in 2022. The highest number of guests using short-term rentals in 2022 was recorded in Paris (13.5 million), followed by Barcelona and Lisbon with over 8.5 million guests and Rome with over 8 million guests. From 2019 to 2023, there was an increase in the highest number of recorded overnight stays, from 96.9 million overnight stays in August 2019 to 124.7 million overnight stays in August 2023.
However, while such accommodation offerings can positively impact tourist numbers, the exponential growth on one side of apartments and on the other side of online platforms through which these apartments are rented to tourists, local residents face negative consequences. This is most felt in the burden on public infrastructure and services such as waste collection, and it is difficult for authorities to monitor and regulate short-term rental services. Furthermore, the increasing number of properties for tourist rentals means fewer properties available for local residents, which consequently raises the prices of existing properties for long-term rent or purchase.
Due to the growing number of short-term rentals, some cities and regions have introduced their own rules to limit access to such services. All these reasons led the European Commission to draft a proposal in November 2022 to ensure greater transparency in short-term rentals and support public authorities in promoting sustainable tourism.
Combating the Shadow Economy
The proposals include the registration of hosts for easier identification and verification of information, then online platforms will have to verify the accuracy of host data for greater user safety, and member states will assist local authorities in monitoring short-term rental activities. Competent authorities will even be able to stop registrations and remove properties that do not comply with the rules, and if necessary, impose fines on the platforms.
The European Parliament and The Council reached an agreement on this proposal in November 2023, and the European Parliament’s Committee on the Internal Market, which worked on the report on the agreement, approved a provisional agreement on these new rules in January this year. At this week’s plenary session in Strasbourg, the European Parliament voted to approve this agreement, and before it comes into force, it still needs to be confirmed by the EU Council, after which EU member states have two years to implement it.
The rapporteur of the EP Committee on the Internal Market Kim Van Sparrentak from the Greens emphasized at the session that cities are experiencing an increase in illegal short-term holiday rentals.
– This makes cities across Europe harder to live in and less accessible. This law requires platforms to share their data with local authorities, enabling them to better enforce holiday rental rules so that apartments remain available for people to live in – said Van Sparrentak.
Tomislav Sokol, an HDZ representative in the European Parliament and vice-chairman of the EP Committee on the Internal Market, explained to Lider that the new rules will better regulate the rental system.
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—– The idea is that online platforms through which rentals are made must provide public authorities with data on accommodation and traffic at the end of each month. This way, the state receives information about the real state of tourism and combats the shadow economy, which I think is positive. At the European level, the data that must be provided to public authorities will be standardized – explained Sokol.
Renters, therefore, are soon awaiting new European rules aimed at increasing transparency in short-term rentals and supporting sustainable tourism, and Sokol explained that those who operate legally, pay taxes properly, and fulfill their obligations have nothing to fear. The new regulation should protect consumers from false offers for short-term rentals.
EU Tied Hands
Regarding the rise in property prices caused by the expansion of short-term rental platforms, Sokol agreed that this is a problem. However, he added that the EU can practically do little in this regard.
– Generally, short-term rentals affect prices and the availability of rentals in cities. Especially we know of cases in Split where students have to move out over the summer so that apartments can be rented to tourists. This is definitely not good and needs to be regulated, but the European Union has limited options for action here. However, what can be done is for the state and local governments to act by encouraging the construction of new properties, through better municipal planning, and through stipulating conditions and better control, which is particularly important in fulfilling contractual obligations in rentals. Therefore, it is especially important to have legal protection, if a landlord breaches a contract, so you can go to court and receive judicial protection in a reasonable time, rather than having it drag on for months and years, as that is no longer beneficial to you. I think people would seek legal protection more if they knew they would receive it in a reasonable time – commented Sokol.
Housing Policy Remains in the Hands of the State
According to the principle of subsidiarity, the EU should address those problems that can only be solved at the EU level, and precisely because of the specificities of individual markets and states, it is difficult to adopt a unified policy that will be equally applicable in Split, Dubrovnik, Stockholm, or Brussels, explained Sokol.
Although there was no dispute over the new rules for short-term rentals (the decision was accepted in Parliament with 493 votes in favor, 14 against, and 33 abstentions), there is much discussion in Parliament about the rise in property prices in some countries, including Croatia.
– Some in the EU would like to regulate this issue with a unified European regulation, but for that, it is necessary to gain majority support in Parliament, as well as from member states. And precisely because member states differ, it is very difficult to find a unique solution on what to do, how to define a unified European housing policy. Especially those countries like the Scandinavian ones that have a very developed social policy do not want the EU to interfere in this. The political obstacles are too great for a unified European housing policy to be adopted, and it is more likely that this will remain in the jurisdiction of the states – said Sokol, concluding that tourism is important, but we cannot ’empty’ coastal cities of local residents for the sake of tourists.
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