By: Melissa Navarro
In early July, a viral video captured diners at a Barcelona restaurant being unexpectedly sprayed with water guns. In the background, protestors chant “tourists go home.” The demonstration occurred shortly after Barcelona’s mayor identified short-term rental websites, like Airbnb, as the cause of the city’s housing crisis.
The post-pandemic travel surge has made Spain a global tourism hotspot, propelling it to become the most visited country in the world. In just the first eight months of 2024, tourists brought in 86.7 billion euros, accounting for roughly 13% of Spain’s GDP. This surge in tourism is believed to be partly driven by the rise of online short-term rentals, such as Airbnb and Vrbo, which have made travel more accessible by providing travelers with a more affordable option. In Barcelona, Spain’s most visited city, short-term rentals have exploded, with over 23,000 listings across Airbnb and Vrbo. With many of Barcelona’s residences already being used as rental properties, the influx of tourists has motivated landlords to move their units from traditional year long leases to more lucrative short-term rental platforms. This shift has reduced the housing supply, driving up rental prices across the city. In 2022, rental prices rose 12%, four times more than income, which rose only 2.6%. Rental prices rose another 12% in 2023. The Metropolitan Housing Observatory of Barcelona (OHB)’s report pointed out that the people most affected by the housing crisis are low income families and young people.
In previous efforts to limit short-term rentals, the city required property owners to obtain a license in order to rent out a unit for less than thirty-one days. In 2023, these licenses were limited to a maximum of ten tourist apartments per 100 inhabitants. Nonetheless, thousands of unlicensed units appear on short-term rental sites, despite the local government’s effort to shut them down. In June, Mayor Jaume Collboni announced that by November 2028, Barcelona will initiate a citywide ban on all short-term rentals in an effort to address rising housing costs. This decision has shocked the tourism rental industry, which has vowed to fight back, likely leading to a legal battle with the city.
While Barcelona’s decision to ban short-term rentals has been the most drastic recent response, other major European cities facing similar challenges are imposing similar restrictions. On June 1, the mayor of Florence, Italy, declared that no more short-term rental licenses will be granted. In Rome, some activists call for a law that would limit the number of days a unit can be used for vacation rentals. Some cities have already imposed such limits. For example, the limit in London is 90 days and in Amsterdam the limit is 30 days. Berlin has taken a different approach by not only implementing a 60-day limit on short-term rentals, but also introducing zoning restrictions that restrict Airbnb listings to specific areas. This compromise came after the city’s initial 2016 ban on short-term rentals failed. In 2018, Berlin’s assembly overturned the ban, replacing it with more moderate regulations to better manage the market.
In response to demand for more regulation, the European Parliament has enacted uniform legislation, noting that “[d]ivergent local rules lead to fragmentation of the internal market.” The new regulations, which passed with 493 votes in favor and 14 against, will now require platforms like Airbnb, Vrbo, and Booking.com to comply with registration procedures and share data with the EU. The EU plans to set up a single digital entry point to receive data from the platforms on a monthly basis. This data will allow authorities to better monitor compliance and limit illegal short-term rentals. While these rules were approved in February, they now need to be adopted by the Council and give EU member states two years to implement them.
While many feel optimistic about the EU’s new regulations, some Europeans are upset by the wave of restrictions that now threaten their livelihoods. For example, in Spain, 2.9 million households own a second property, in which around one-third are dependent on short-term rentals to make ends meet. Luigi Daniele, a writer for Linkiesta Italia, argues that the new regulations restrict travel opportunities for young people and low-income families, while granting hotels monopolistic control. Daniele points to New York City as an example, where in 2023 the city prohibited rentals under thirty days and caused hotel prices to soar. Sophie Calder-Wang, an assistant professor at Wharton, studied the impact of short-term rentals on New York City. She found that while the presence of short-term rentals did increase annual rent of the median tenant by $125, this was minimal where rent in New York City had increased by 32% over the previous decade, implying that short-term rentals contributed a mere 1% to rent aggregate growth.
As cities across Europe continue to experience challenges arising from short-term rentals, varying regulations reflect their efforts to balance protecting affordable housing and sustaining their tourism-reliant economies. Whether these measures will succeed in striking the right balance remains to be seen across the EU.
