French mayors take on Airbnb amid a housing squeeze

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France is seeking to clamp down on Airbnb and other holiday rental companies, spurred on by mayors in tourist destinations such as the Alps and the Basque country who are concerned that the platforms are worsening housing shortages and disfiguring historic centres.

The French national assembly is set to vote on Monday on a draft law that would give local authorities broad powers to set quotas on short-term rentals or impose compensation mechanisms, such as requiring landlords to add a unit of long-term housing for each unit let out on Airbnb. A tax advantage is also on the chopping block.

Iñaki Echaniz, a Socialist lawmaker from the Pyrénées in south-west France who co-wrote the legislation, said the proposals would empower local officials to regulate the market and repel a wave of lawsuits that have been filed by property owners and unions who oppose such restrictions.

“Young people in my district and nearby along the coast around Biarritz simply cannot afford to live here anymore and that’s not right,” Echaniz said. “Even in popular tourism areas, housing should not be a speculative asset dominated by private interests.” 

Courts meanwhile have suspended new quotas from taking effect in Annecy in the Alps, Saint-Malo in Brittany and La Rochelle on the south-west coast while legal challenges are being reviewed.

The French proposals come as cities, such as New York, Berlin and Barcelona, tighten their regulations on Airbnb and other platforms, putting pressure on the companies’ business models. The mayors’ concerns echo local officials from tourist areas elsewhere about the ripple effect of short-term rentals on residents and beauty spots.

The proposed law may also go as far as scrapping a tax advantage that allows owners of short-term holiday rentals to reduce their taxable amount by a generous 71 per cent, compared with only 30 per cent for a traditional lease.

If the law is passed, it would be a blow to holiday rental platforms, especially Airbnb, since France is its second-biggest market in terms of listings after the US, according to analysts.

But even the law’s advocates admit there is a risk that it will be watered down or again delayed amid intense lobbying from landlords’ groups and the platforms. 

Airbnb has particular influence ahead of the summer Olympics to be hosted by Paris in July because many residents want to rent out their homes to the 15mn visitors expected to attend. The US short-term rental group is a top-level sponsor of the games.

UNPLV, a trade association whose members include Airbnb and Abritel as well as service providers for holiday lets, opposes several measures in the draft law, such as the quotas, arguing that they would amount to illegal limitations on the property rights of homeowners. “We don’t accept the charge that short-term holiday rentals are aggravating the housing crisis, and these proposals are populist, oversimplistic answers to a very difficult problem,” said UNPLV president Dominique Debuire.

Restrictions already exist in Paris, one of the world’s most popular tourist destinations and Airbnb’s single biggest city, including a cap of 120 nights a year for primary residences and a requirement to register flats before putting them on short-term rental websites. 

The city employs a squad of 30 inspectors who scout for illegal rentals by knocking on doors, checking mailboxes and identifying key boxes where hosts stash keys for guests. It filed several hundred lawsuits last year against owners, but city officials say they need new powers to intensify controls and cut down on the estimated 25,000 illegal rentals focused in the city centre, including popular areas such as the Marais and Montmartre.

The new law would allow smaller cities and towns to follow the example of Paris by scrapping a rule that meant that restrictions could only be imposed in places with more than 200,000 residents.

“France is already home to the most sophisticated short-term rental rules in Europe,” said Emmanuel Marill, Airbnb’s head of Europe, Middle East and Africa. “The additional national rules that are being discussed will chiefly hurt casual hosts — particularly primary homeowners — and parts of France where short-term rentals are wanted and needed by the local tourism ecosystem.” 

The proliferation of short-term holiday rentals has helped transform tourism in cities and towns across France in the past decade. The online platforms have added capacity and lodging options beyond hotels and have brought people to lesser-known villages and rural areas. However, they have also removed some housing stock from the long-term rental market and hollowed out neighbourhoods. 

In Annecy, a medieval town on a lake surrounded by mountains, there are four times as many short-term rentals in the old town today compared with five years ago, said mayor François Astorg. A housing shortage has worsened and rental prices pushed up for full-time residents, he argued, and the city has not been able to move ahead with planned quotas because of court cases.

“Butchers and bakeries are being replaced by Airbnb concierge services,” he said. “I’ve received a complaint from a person who is the only full-time resident left in a 12-apartment building — the rest are all holiday rentals.” 

Astorg added that the city is not against Airbnb and supports the development of tourism for the local economy: “But we do not want the historic centre of Annecy to turn into Disneyland. Things are out of hand.”

In the south-west city of Bayonne on the Atlantic coast, mayor Jean René Etchegaray has had some success in curbing the platforms. Bayonne defeated court challenges to move ahead last year with a requirement for owners to compensate for each short-term holiday rental with a corresponding long-term one. “We did impact and historical studies to prove that there was a public interest in changing the law to address the housing shortage,” Etchegaray said.

About 4,200 three-year licences for short-term holiday rentals had earlier been issued in the Basque country but, since the new regulation took effect in March 2023, only two new permits have been issued. “We’ve stopped the haemorrhage,” he said.