As the cost of living rises, people are relying on new sources of income to pay their bills, such as renting out a spare room.


In the Paris region, the number of primary homes listed on Airbnb increased by more than 80 percent in May 2024, compared to the same time last year, as local families hoped to take advantage of pent-up demand for pre-Olympic travel.



When it’s that expensive, renting out a room can be a lifeline.



“I know a former IT professional who wanted to be a teacher, but occasionally had to rent a room to guests to pay the mortgage,” says Maarten Bruinsma, chairman of Amsterdam Gastvrij, a group that represents vacation home owners. “When things are so expensive, renting out a room can be a lifeline.”


through Airbnb

But the rise in short-term rentals has also caused consternation in tourist hotspots, where buy-to-let properties are believed to have contributed to high house prices. In Athens, for example, the city government is involved in a legal dispute with companies buy entire apartment complexes can be rented out on platforms such as Airbnb or Booking.com.


Although “illegal hotels” and people who own multiple rental properties are reducing the housing supply, they are not the average host on Airbnb. Focusing on these isolated cases runs the risk of short-term rentals becoming a scapegoat for more substantial factors to ride house price inflation, such as rising construction costs and mortgage interest rates. Regulating on this basis also risks stifling crucial income streams for people facing difficult economic circumstances.


In Amsterdam, short-term rentals are limited to 30 nights per year, while cities such as Barcelona plan to stop renewing short-term rental permits in 2028. Very strict regulations that effectively banned short-term rentals in New York appeared to hit the spot. the city’s poorest neighborhoods bear the brunt, reducing visitor spending in these regions by an estimated $1.6 billion per year and reducing employee income from Airbnb guest spending by $573 million.



Although “illegal hotels” and people who own multiple rental properties are reducing the housing supply, they are not the average host on Airbnb.



Meanwhile, hotel prices in Manhattan have risen more than 50 percent year-over-year to an average daily rate of $524 – far more than most people can afford. There is evidence that short-term rentals help reduce the prices of tourist accommodation in key European destinations by providing affordable alternatives.


In Europe, where some regulation of short-term rentals is being introduced at national level, governments also risk widening the rural-urban divide. “In rural areas where it is not feasible to keep a hotel running all year round, short-term rentals are typically the only way to generate tourist income outside the high season,” says Klaus Ehrlich, general secretary of RuralTour, the European Federation of Rural Tourism. “In addition, these regions usually have a housing surplus because there is not the demand for housing that there is in the cities.”


through Airbnb

It is not possible to tackle the problem


Cities like Barcelona, ​​which regulate the entire short-term rental market in an attempt to ease pressure on the housing market, are finding the rules have limited effect.


“What you need to think about is how many of those short-term rental properties will return to the housing stock, and the answer is very few,” said Matthew Dass, associate director at Oxford Economics, noting that a significant portion of Airbnb listings are vacation homes or spare bedrooms. for longer term rental.


Over-regulation simplifies a complex mix of economic factors such as urban migration, aging societies and rigid urban planning regimes that underlie the lack of housing in European cities. For some, such policies amount to political point scoring. “The reason the scheme does not target hotels and hostels is that it would cost approximately €200,000 per hotel room to revoke their permit,” says Bruinsma, noting that limiting short-term rentals is free.


Private individuals who choose to continue renting out their home risk high fines for any mistakes. If you do not communicate the number of nights someone will be staying in advance, landlords in Amsterdam can be fined up to €8,700.



Restrictive regulations can have unintended consequences.



In Amsterdam, individuals account for 95 percent of Airbnb hosts. They are the hardest hit by the city’s strict short-term rental rules to limit the number of tourists in certain areas. A recent report from Oxford Economics, which highlights the economic and social contributions of short-term rentals across the EU, warns that restrictive regulations could have unintended consequences, raising the cost of accommodation for ordinary travelers and hurting local landlords’ revenues.


“What you actually see is that although short-term rentals in Amsterdam have fallen by 52 percent because of these regulations, the total number of guest nights has increased by 12 percent,” Dass explains. “So what we estimate is that approximately 269 million euros in income for landlords in Amsterdam will be lost due to that policy.”


Suggestions like Spain Increasing VAT on short-term rentals to 21 percent also puts pressure on the wallets of private individuals who want to rent out their property. Unlike hotels, which can write off the cost of repairs or cleaning as a taxable expense, renting a room is not considered a “business activity,” further reducing the incentive to rent or rent out a guest room.


A better way of regulating


A balanced policy starts with guaranteeing transparency in the short-term rental market. In February 2024, the European Parliament approved new data sharing rules requiring major online platforms share rental data with local authorities every month. This will help correct misconceptions about short-term rentals and aims to prevent over-regulation that could harm local communities and tourism. If governments are not careful, they will squeeze those struggling to make ends meet – while the real housing crisis remains unchecked. Smart policies will preserve the economic benefits of short-term rentals while addressing the potential downsides. By using data, governments can not only implement more effective policies, but also demonstrate that their policies achieve the intended effect.




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Nebraska medical marijuana legalization is closer to reality after judge's ruling but an appeal is likely
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Nebraska medical marijuana legalization is closer to reality after judge's ruling but an appeal is likely
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