[Publication] Legal developments on short-term rental accommodations in the European Union

The Cali Apartments SCI case[1] has been vastly cited and applied in ongoing national litigation. Member State authorities have generally welcomed the judgment, as it states that a legitimate public interest may exist for regulating short-term rental (STR) at the national/regional/local level. It even allows for authorisation schemes, provided that the measures adopted are necessary, adequate and proportionate.

Despite Cali Apartments SCI‘s validation of authorisation schemes as a matter of principle, many competent authorities still report difficulties with STR on the following three fronts: (i) excessive litigation, which impacts resource consumption and the social credibility of regulatory frameworks; (ii) gathering empirical evidence and correlating it to specific regulatory measures and policy choices, which is complex and uncertain in an ever-evolving field; and (iii) lack of collaboration of digital platforms on data gathering and the withdrawal of illegal listings, which undermines enforcement efforts.

The main challenges ahead stem from the multi-layered competences in STR accommodation, both from a territorial and a material perspective (i.a. property rights, urban planning, tourism regulation, consumer protection). This leads to divergent and even incompatible interpretations by different public authorities or courts on the scope and limits of the applicable rules and, in turn, to a climate of legal uncertainty. Given the unprecedented dimensions of the STR phenomenon due to digitalisation and a generalised perception of non-reliability of the regulatory system (i.e. too much and too fragmented regulation, which is scarcely, unequally or inefficiently enforced), the result is under-enforcement. Competent administrations lack capacity and resources to respond to the STR phenomenon and its social repercussions.

European action in this field may face a number of challenges. Probably, thorough regulation of this activity, if needed, is better accomplished at a level closer to the citizen, as the principle of subsidiarity mandates. However, there is enough room for policy action as regards (i) contributing to a general perception of the reliability, credibility and validity of regulatory frameworks in Member States, unless overturned in court; (ii) better explaining the potential uses and scope of existing EU legal instruments applicable to STR; and (iii) considering the adoption of cross-border enforcement mechanisms as regards administrative orders or fines related to STR accommodations.

[1]     Judgment of the CJEU (Grand Chamber) of 22 September 2020, Cali Apartments SCI and HX v Procureur général près la cour d’appel de Paris and Ville de Paris, Joined Cases C-724/18 and C-727/18, ECLI:EU:C:2020:743.