Sector regulation and controls  

Ownership and tenure

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Regulating short-term letting: cases from the UNECE region 

Short-term letting (STL) has grown rapidly as new digital platforms have brought together local accommodation providers with the global tourism market. This has caused numerous problems for cities, their housing markets, and local residents. A recent review of actions taken by eleven cities indifferent countries identified three categories of responses to the rise of STL:  

  1. Permissive regimes which enable and encourage short-term letting can be found, for instance, in London and Phoenix;  
  2. Notification and restrictive systems, such as thosefound in Paris, which regulate STL;  
  3. Prohibitive regimes and those preventing the useof homes for short-term letting, for instance, in Amsterdam, Berlin, Barcelona and New York.  

Across the United States, a variety of approaches have been applied in different cities. For example, New York City tries to detect illegal stays and prosecutes hosts for violating 30-day minimum tenancies. The city of San Francisco requires hosts of short-term holiday rental housing to register with the municipality, which in turn tries to limit short-term lets to short periods, provided the hosts themselves reside in the dwelling for at least 275 days per year. In Portland, Oregon, the local planning code is used to require dwellings to be occupied by the host and used for at least 270 days per year. It also limits the proportion of dwellings in apartment blocks which can be short-term let to 25 per cent.  

Amsterdam has introduced a ban on “holiday rentals” – entire homes without the owner present, as opposed to rooms in homes with the owner present – in three neighbourhoods in the city centre and is looking to expand this to surrounding neighbourhoods. There is also a yearly cap of 30 nights in Amsterdam for holiday rentals and 90 nights in Berlin. Registration or a permit is also required in both cities.  

However, in almost every city, it is local government rather than short-term letting platforms, that bear the burden of ensuring compliance. This has required significant resources and has proved both challenging and onerous for some tourist-attracting cities.  

While the effects of STL are mainly felt in cities, policy decisions and court cases at both national and EU level strongly affect the possibilities of regulation. In 2019, the Court of Justice of the European Union (CJEU) published an opinion that regarded short term housing rental platforms as digital service providers, thereby exempting them from regulations for real estate agencies. However, a more recent decision backed cities by confirming that regulating STL can be seen as a measure to curb housing shortages.  

Taxing vacant housing based on potential rental income in France 

France has extensive experience in developing and applying vacancy taxes, which encourage owners to reintroduce empty dwellings to the housing market in areas where there is unmet demand, in order to improve access, especially by low-income households. Introduced in 1998, the French vacant homes tax applied to all liveable housing that have been vacant for more than two years, but public housing was exempt in 680 larger urban areas. The tax related to the potential annual rent that the property could produce, initially at a rate of 10 per cent of the rental value during the first year when the tax was due(after two years of vacancy), increasing to 12.5 per cent for the second year (3-4 years vacant) and 15 per cent after four years of vacancy. The vacancy tax has since been substantially widened in application and its rate increased.  

Research on the application of the tax has found that it influenced the behaviour of owners of vacant units, who converted their dwellings for use as primary residences and reduced the vacancy rate by a substantial 13 per cent over four years, with stronger results in areas of higher vacancy. The tax accounted for a 13 per cent decrease in vacancy rates between 1997 and 2001, especially among long-term vacant dwellings, and most vacant units were turned into primary residences.  

In 2013, the vacancy tax was substantially strengthened. The duration of tax-free vacancy was reduced to one year, and the tax rate began at 12.5 per cent of potential rent income and increased to 25 per cent in the years following the property being left vacant. The government also made the tax compulsory for local areas with more than 50,000inhabitants.  

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