[Publication] The regulatory aspects of short-term rentals in the EU

Short-term rentals (STRs) refer to ‘the repeated short-term letting, for remuneration, of furnished accommodation to a transient clientele which does not take up residence there’, whether on a professional or non-professional basis (CJEU, 2020). Facilitated by digital platforms, the rapid increase in STRs has had visible effects in many European cities, towns and villages popular with visitors. This has been accompanied by intense debates on their positive and negative impacts. In many locations, a large part of the STR supply is no longer composed of individual homeowners occasionally sharing their home, but of professional operators and investors managing entire units. In places with tight housing markets, this has contributed to a decrease in the supply of long-term rentals; added to the existing rise in rental and sale prices; and fuelled the displacement of long-term residents. While those impacts may not be quantitatively significant at the level of an entire city, they are strongly concentrated and felt in particular neighbourhoods, or in small tourist towns. Those impacts are mediated by national, regional and local housing systems, regulations and policies.

In response, public authorities at different tiers of government have developed new forms of regulation to control STRs. Various regulatory instruments have been used: some affect access to the market (and potentially restrict the growth of STRs); others simply influence the operation of the market. Local approaches to STR regulation in the EU range from light, through intermediary, to more restrictive approaches. Many city governments have sought to find a middle-ground approach that differentiates between the professional rental of whole units and the occasional rental of one’s primary residence. This variety of STR regulations reflects different policy agendas, which respond to different local socio-economic conditions, tourism patterns and housing market dynamics.

Stricter regulations have led to a degree of reduction in the number of STRs, but their effective implementation is constrained by four major challenges: (i) a lack of precise data about who rents a unit as STR, in what capacity, at which location, for how long; (ii) insufficient human, technical and financial resources for monitoring and enforcement activities; (iii) limited cooperation from platforms, despite their essential role in facilitating enforcement; and (iv) constant litigation against local STR regulations, creating uncertainty and delays.

Two key strands of EU law influence the regulation of digital platforms and STRs: (i) the 2000 E-Commerce Directive, updated by the 2022 Digital Services Act, which are relevant to digital platforms; and (ii) the 2006 Services Directive, which is relevant to STR operators. The interpretation of EU law by courts ultimately shapes what forms of regulation of STRs, and of digital platforms, are acceptable in EU Member States. In addition, the 2024 Regulation on Data collection and sharing relating to short-term accommodation rental services should facilitate the harmonisation of data generation and sharing between STR platforms and relevant national public authorities. Recommendations relevant to EU policymakers are drawn in relation to those fields of EU legislation. The EU legal and policy framework can be strengthened and revised, in order to enable STR regulations that contribute to a better access to affordable housing — a public interest objective upheld by the Court of Justice of the European Union.