Co-founder at Uppercase. Passionate about real estate, technology and growing international businesses.
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When Airbnb launched in 2008, travelers around the world raved about the opportunity to rent individual rooms or entire homes for less. Landlords were also intrigued by a vast new market and this new way of filling their short-term rentals.
However, not everyone is happy with how companies like Airbnb and Vrbo have affected existing markets and culture, damaging residential rental in some of the most popular cities. The resulting regulations have ensured that you need to be determined and knowledgeable when investing in this sector.
Why many authorities are fighting against vacation rental platforms
The changes Airbnb and other vacation rental platforms have made to the rental market have allowed landlords to charge much higher rents than what were once riskier and more difficult to realize short term opportunities. term. It didn’t take long for many landlords to abandon lower long-term rentals to take advantage of this opportunity.
This has created a real problem with residential rentals, drastically reduce the number of accommodations available for workers and residents in popular tourist towns. It has also reduced the number of visitors staying in licenses, paying reception accommodation.
The critical problem for the authorities (of which there are many) was that residential markets were shrinking – not only that, but with them, the city’s culture and a crucial part of its revenue via taxes and licenses.
Local authorities constantly fear that their capitals and most popular cities will become more theme parks or museums than cultural havens if they lose the character their residents create from within.
Which cities are strictly against these platforms?
Featured battles largely come from popular European cities with abundant tourism. However, the conflict is growing around the world, with sites in Japan, Brazil and Turkey also imposing tough new restrictions.
Paris, Barcelona and Amsterdam have some of the toughest European policies yet, with Miami and Santa Monica leading the charge in the US.
However, there are further moves from Berlin, Bologna, London and Prague, to name just a small selection of the many European cities that have followed suit and pressure against the platform to protect local citizens and their city’s cultures.
Regulations vary from place to place. For example, in Paris, owners must Register each listing individually, and rentals in Barcelona require a Tourist Use House License. I think you can expect these trends to gain momentum with more local governments implementing plans to combat the changes.
Outside of Europe, Singapore has some of the the strictest Airbnb policies around the world, and renting a property in New York is illegal if you do not live in the property. Los Angeles tries to ban Airbnb rentals used as party houses while adding additional restrictions to non-party properties.
Paris led the charge from day one
It’s no surprise that Airbnb’s most popular city has been fighting the platform the longest. Implementing registration rules that require a mandatory, traceable ID number and an annual cap of 120 nights per year, a Paris court found the platform guilty of illegal registrations, fining them more $9 million for not complying.
The 90 day rule in London
Paris is not the only city to set a limit on short-term rentals. London has changed its legislation allowing short-term rentals in the city for just 90 days a year– just like Manchester – and a 140-day limit outside the Greater London area.
Changes to Airbnb regulations have seen lots of support. Reykjavík followed suit at 90 days, while Amsterdam only allows a maximum of 30 days, with a total ban in some parts of the city.
Barcelona prohibits room rentals
Barcelona recently became the first city to to prohibit short-term private room rentals – the type of rentals that initially spawned platforms like Airbnb and Vrbo.
They also introduced heavier licensing requirements for short-term and vacation rental opportunities to counter professional takeovers by companies buying and renting multiple apartments while circumventing rules and the costs incurred by hotels and resorts. private rentals.
Vienna tightened tax laws leading to legal action against Airbnb
In 2017, Vienna changed its tourist tax laws to deal with how Airbnb owners have systematically evaded local regulations and taxes. With dozens of listings visible on Airbnb, his low tax earnings just didn’t make sense.
Which cities are still relaxed with regulations?
Outside of major tourist traps and capital cities, there are still plenty of opportunities to invest in Airbnb rentals.
For every website warning you about regulatory issues, there are still a dozen others projecting high occupancy rates in areas with solid rental rates. A quick search should determine if these areas are free of regulation and a suitable “easy” investment for your capital.
Dallas, Milwaukee, Cincinnati, Maui, and Charleston are some of the areas I recommend for low-regulation, high-return areas in the United States.
Which cities thrive on apps like Airbnb?
Despite legislation being stumbling blocks for landlords across Europe, the most successful are still those who make the headlines. This includes London, Paris, Munich and Dublin, but for how long? I recommend keeping a close eye on how current legislation and its enforcement transpires.
However, stepping away from the bigger European cities and capitals, I think there are plenty of French tourist towns, Swiss ski resorts and Spanish regions that will still offer a hassle-free healthy return.
Summary
Changes to rules and regulations around platforms like Airbnb change frequently and locally, so if you’re considering investing in major cities or elsewhere, it’s essential to do your due diligence.
The savvy investor should have strategies on, for example, how to circumvent Airbnb’s maximum stay rules and when they should apply relevant legislation. You’ll also need to be aware of how many additional marketplaces are available without getting bogged down in paperwork and licensing.
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