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EU court adviser: cities can crack down on vacation rentals to protect long-term housing
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EU court adviser: cities can crack down on vacation rentals to protect long-term housing

Michal Bobek, Advocate General to the European Court of Justice (ECJ), published an opinion on Thursday stating that individual countries and cities could lawfully place restrictions on short-term rental housing, like that popularized on the platform AirBnb. Bobek wrote that “[t]he objective of tackling a shortage of long-term housing can … constitute an overriding reason relating to the public interest capable of justifying a national measure,” such as those requiring people who offer short-term rentals to get authorization from local governments.

In the case, two Parisian apartment owners who had rented out their spaces on AirBnb had sued after the city of Paris fined them for doing so without authorization. The apartment owners contended that restricting short-term rentals violated laws regarding the fundamental freedom to provide services in the EU, and the French court referred questions about that matter to the ECJ. The Advocate General’s Thursday opinion suggests that the ECJ is likely to rule that Paris can justify its rental restrictions.

Many cities throughout Europe and worldwide have taken steps in recent years to combat some of the effects that pervasive vacation rentals have on the residential housing economy, and the ECJ’s upcoming ruling on this matter will clarify several open questions about the efficacy of such measures.

Under EU law, the so-called “Services Directive” requires that national and local efforts that restrict the freedom to provide services must be justified by “overriding reasons relating to the public interest.” Requiring short-term rental services to get authorization is one such limitation, noted the Advocate General, but “combating a housing shortage and seeking to ensure the availability of sufficient and affordable (long-term) housing (in particular in large cities), as well as the protection of the urban environment, are valid justifications for the establishment of authorisation schemes broadly based on social policy. Such reasons can equally be invoked to justify the criteria of an authorisation scheme.”

A stickier question that the ECJ will face when it decides the case is whether other requirements of Paris’s short-term rental rules are sufficiently proportionate, or narrowly focused enough not to overreach in their limitation of the freedom of services. Paris, for example, requires that authorized vacation rentals be offset by newly available residential housing. The ECJ will have to provide direction for the French courts to analyze whether this second layer to the authorization is also justifiable. It would be lawful, wrote the Advocate General, “provided that those provisions comply with [EU law] requirements … in particular with the conditions of proportionality and non-discrimination, which is for the referring court to verify.”