Airbnb vs Paris vs the European Union

Main Photo: Airbnb, fighting legal battles in 13 European cities

Location: Europe

Who: Airbnb and other short-term rental platforms

What Did They Say: Rather complex! but in a nutshell… last year the City of Paris lodged a complaint against the company “SCI panorama immobilier”, arguing that the company didn’t comply with “the Law of 6 July 1989 of the Building and Housing Code”.

On January 17, the Paris Regional Court handed down its verdict on the case opposing the City of Paris and the company called “SCI panorama immobilier”: this is an important decision for Airbnb and for Parisian landlords that rent their apartments via the platform……

However, this decision could also interest Airbnb hosts elsewhere: it emphasised the fact that the next battle will happen in Brussels.

Among other things, this law stipulates that any change in the use of a secondary residence must first be declared to the town hall; this includes changing from long-term rental to furnished tourism rental for example, meaning the flat leaves the local market to enter that of tourists by being rented on Airbnb.

This law also establishes the system of “surface area compensation”: every square meter leaving the main rental circuit, for example for the tourism market, must be compensated for by new square meters entering the main circuit.

In other words: the company rented accommodation on Airbnb without informing the Paris City hall about the changes of destination of the flats.

Therefore: the town hall files a complaint (since the company did not inform it about the change in use of the apartments, they did not set up the mandatory compensation, a point which is not explicit in the court’s note).

The City demands the payment of a 50,000 euro fine for non-compliance with the law. And that is one of the cruxes of the problem. While the company does not dispute the facts, it is nonetheless requesting a stay of payment for the fine, arguing that the European court of justice has been seized with a similar case.

They hope that their fine will be cancelled if the national law is found by the European court of justice to be incompatible with EU law.

Almost all major European cities now have regulations directly linked to Airbnb’s activity: in Paris, it is impossible to rent an apartment for more than 120 days (with nuances depending on whether the accommodation is a primary/secondary residence), and it is necessary to request a registration number from the Town Hall (as a consequence of the famous “Airbnb decree” signed in 2016 to apply the law for a “Digital Republic”).

In Amsterdam, on January 1, 2019, the limit was increased to 30 days of rentals per year and per apartment. Obviously, all these measures are criticised by the platform. Mr. Aurélien Pérol, who is in charge of communication for the platform in Europe, denounces “lobbying by hotel services unions”. It should be noted that Aurélien Pérol is very familiar with the legislation as he worked for the administration that set it up. He previously worked in the office of the Secretary of State for Digital Technology, Axelle Lemaire.

Faced with this multiplication of regulations, Airbnb turned to Brussels.

This is explained by a press release from the company dated January 24, 2019: “the European Commission announced today (NB: according to the company’s press release) the launch of an investigation to determine whether the cumbersome registration procedure imposed on furnished tourist accommodation in the city of Brussels contravenes European regulations”. In particular, the company denounces “heavy” and “disproportionate” local rules.

And indeed, the Belgian capital seems to be at the forefront in regulations furnished tourist accommodations: obligation to submit a file to the town hall, with for example a compulsory fire safety certificate, a registration number, a limit of 90 days of rentals per year/apartments… If these regulations are determined to be contrary to EU law, they will logically be contrary to it in all states applying similar rules, the fine levied on the Paris-based company SCI panorama immobilier could then be cancelled.

One of the other problems highlighted by this Paris Court order remains the difficulty for town halls to issue fines for fraudsters, when precisely they already lack the means of coercion to enforce the law. Despite a record number of fines in Paris in 2018, with more than 2 million euros demanded by the Paris City Hall from fraudulent owners, more than 80% of ads on Airbnb are still illegal, and do not give their registration numbers for example (a figure put forward by a survey conducted by the French newspaper Le Figaro).

It is therefore a triple blow for the mayor’s office: – failure of one of its offensives – which will enable the suspension of all fines – and failure of one of its regulations, put on standby by the EU, even though the city is already struggling to enforce the law.

Needless to say, the town hall does not plan to stop there. Ian Brossat, assistant for housing at the Paris City Hall, and author of the book “Airbnb: an uberized town”, is already preparing a new action: “a complaint against platforms that do not respect the law.”

Conclusion: This is, in fact, just another skirmish in the battle between rental platforms and major European cities including the complaint filed by 13 European cities or regions on October 10, 2018, to the European Commission. More precisely, it is a battle that has moved from national frameworks to Brussels.

A Response from Airbnb France: 

“Airbnb has already worked with other STR (Short Term Rental) platforms on measures to help Parisian hosts share their homes and follow the rules, while respecting EU law. Meanwhile, we remain convinced that Paris’ broken and disproportionate STR rules breaks EU rules and have a negative impact on the 1 in 5 Parisians that use Airbnb. We look forward to making our case in court and to working with everyone on better solutions for everyone in Paris.”

And some background information:

Airbnb complies with all applicable legal requirements:

• We have informed widely our local host community, including a series of new public meetups, 120,000 emails sent to Parisian hosts, updated information available on our responsible hosting page.
• We also created a new field for Parisian hosts, allowing them to fill in their registration number on their Airbnb listing and have it appear on our platform.

It’s time to go forward from a broken registration system that breaches EU law and the French constitution…

• European rules make clear platforms must not be required to monitor proactively activity of their users, to enforce STR rules on behalf of regulators
• Paris’ STR regulation scheme is not based upon solid legal ground. Last January 17th the Cour de Cassation has referred to the CJEU on burdensome and costly rules that make it impossible for local hosts to obtain a “change of use” for new STR in Paris, following a complaint by local hosts. The Cour de Cassation has also referred to the French Constitutional Council whether Paris’ agents controls in Parisian listings without any hosts consent or valid warrant are infringing the French bill of rights and Constitution, following a complaint by local hosts.

…and work together on solutions that really work for Paris

• Airbnb already works with French Government and other accommodation providers to make sure homesharing grows sustainably in French bigger cities.
• In an agreement with French Government Airbnb committed with other STR platforms such as Homeway, Abritel, le Bon Coin and TripAdvisor (but not Booking.com) on a series of actions to preserve housing in bigger cities, including implementation of 120 days automated caps in French bigger cities by January 2019 and regular data releases on our activity with local authorities.

Meanwhile in the UK: From our friends at Russell-Cooke (London based lawyers)…

The London 90 Day Rule: It goes without saying that London is a hotspot destination for tourists, and therefore a fruitful market for property owners looking to boost their income by renting homes to travellers. Due to this, London has followed the trend of its European counterparts and imposed a limit on the number of nights a residential property can be let on sites such as Airbnb.

In London, residential property can be let for up to 90 nights in the year (as per the Deregulation Act 2015, which came into force January 2017), without any specific planning permission.

For any more than that, property owners must apply for a change of use from Class C3 (Dwelling House) to C1 (Hotels Boarding Houses, Guest Houses – see here for further comment on hostel/hotel use classes within the UK). Failure to comply with this can lead to a fine of up to £20,000. Whilst this is notably less that that demanded by Paris, it is still enough to make most property owners re-consider committing a breach, or at least search for loopholes.

London hosts have sought numerous ways around this restriction, from listing on a mix of different sites, to registering the same property under a slightly different description. Although these approaches have allowed some hosts to let their properties for longer than the 90 night limit, those considering such actions should beware of their continued vulnerability to a fine.

Other UK-based restrictions to Airbnb lettings:

• Glasgow – in February 2017, Glasgow City Council released planning guidance which addresses short-term accommodation (City Development Plan: SG10 Meeting Housing Needs)
• Northern Ireland – The Tourism (Northern Ireland) Order 1992 requires that anyone offering accommodation by tourists by way of trade must hold a valid certificate
• Isle of Man – all visitor accommodation needs to be registered with the Department for Enterprise
• Guernsey –a permit must be issued by the Guernsey Government in order to provide paid visitor accommodation.

If you are in any doubt as to how restrictions on short-term letting may impact your business plans, it is best to seek legal advice, or at the very least, consider speaking to your local council for guidance.

 THPT Comment: Wow, probably above my pay-grade to give you sensible commentary on this! Look forward to the next round! Please feel free to email me your comments.

First Seen: Hospitality On

The Hotel Property Team (THPT) is a small group of highly experienced business professionals. Between us, we provide a range of skills and experience which is directly relevant to those involved in the hotel property market.

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