Friday, January 19, 2018

Too Slow To Legislate: Rentals

Javi López is an MEP from the PSOE socialist party in Catalonia. Via the European Parliament, López has called on the EU to act against websites such as Airbnb. He says that these websites - or more accurately the availability of rented accommodation for visitors - are driving residents out of large cities such as Barcelona. He recognises that the so-called collaborative economy constitutes a market revolution and does offer new opportunities for consumer. However, this comes at costs - unfair competition, the "gentrification" of urban centres, threats to labour rights, exorbitant increases in prices, loss of trade for small businesses, the creation of "ghost" urban centres deprived of life because residents have been expelled.

In order to address these issues, López wants the EU to regulate websites at a European community level in similar ways to which cities or governments have done in order to ensure the "equitable" availability of housing. The chances of the EU doing this are, you would think, pretty slim. In June 2016 the European Commission presented its recommendations for member states with regard to the collaborative economy in its different guises, so therefore the likes of Uber as well as Airbnb.

These recommendations included one which stated that restrictions or bans could only be permitted if they were "proportional", which did rather beg a question as to what proportional means. “Absolute bans and quantitative restrictions should only be used as a measure of last resort,” said the commission, a vice-president of which stated that stricter regulations on sharing economy companies could cost Europe. What also is a "last resort"?

While not seeking to be restrictive, the commission nevertheless accepted that the collaborative economy does raise questions related to employment and consumer protection, social security, tax issues and safety standards. Since then, there does seem to have been a shift in European thinking. While remaining steadfast to a principle of non-restriction, there has been a growing appreciation of difficulties surrounding matters that had been identified in June 2016, not least the payment of tax.

The European Commission is in the process of analysing guidelines for the holiday rental industry, but it would still seem most unlikely that it would go as far as politicians such as López would like. Meanwhile, and despite the recommendations that were made some eighteen months ago, there are all manner of local regulations that are designed to be restrictive.

In Amsterdam, as an example, the town hall has announced that from the start of 2019 owners of apartments that promote via Airbnb or similar will only be able to rent out for a maximum of thirty days per annum. At present, there is a limit of sixty days. The decision has been taken in order to "limit the negative influence of holiday rental apartments". According to the town hall, the numbers of apartments marketed on websites went up from 4,500 in 2013 to 22,000 in 2017. This increase has "unwished-for repercussions in various neighbourhoods of Amsterdam".

The situation has of course been mirrored elsewhere - Palma, for instance - and it has cascaded downwards from the big cities to the resorts, and not only in Mallorca. The Amsterdam figures, with a fivefold increase in the space of five years, speaks volumes for the spectacular rise of the collaborative economy holiday rental industry, but the term collaborative economy has now been shown to stand for speculation and for abuse. What was once a good idea has been turned into a monster of greed with its demands of complete freedom of market, often with little consideration for labour and tax standards, that is breeding social discontent.

I will continue to maintain that had there been legislation in 2012 or 2013 that would have permitted the legalisation of at least a proportion of apartments (if not all of them) so that these could have been openly marketed as tourist lets, we would not now be in the situation that we find ourselves. Much of the stock of holiday rental apartments that has surfaced since then is purely because of speculation that has been created by the websites. Had there been legislation, effective and clear legislation, anything coming onto the market after, say, 2013 or 2014, would have been illegal and would remain illegal. Unfortunately, the Partido Popular chose to sit on their hands and did nothing.

As a consequence we have the broad brush approach of the current government allied to the absurdities that are bound to emerge from zoning. And this approach, meanwhile, seems to run counter to what the European Commission recommended. Or is it a justifiable and proportional "last resort"? Who knows, but the Aptur holiday rentals association would like to get an answer; hence why it intends a challenge to the Balearic legislation in Brussels. But a challenge based on what? The EU now seems unsure. The collaborative economy has created a legislative minefield that is being plotted with slowness and uncertainties.

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