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French lawmakers took a significant step on November 7 by passing legislation to tighten the regulation of tourist accommodations like Airbnb.

This move, which has been in development since April 2023, aims to limit tax breaks for properties used for short-term rentals in an effort to counteract the nation’s affordable housing shortage.

“The boom in Airbnb-type rentals has contributed to encouraging speculation and further complicating access to conventional housing,” said Annaïg Le Meur, one of the key figures behind the bill.

The new law is part of a broader effort to reclaim housing stock and ensure that residential properties serve their original purpose—providing homes for long-term residents.

With cities facing the dual challenge of tourism management and housing accessibility, France’s legislative step represents a significant move towards curbing speculative behavior in the housing market.

However, France is not alone in clamping down on short-term rentals like Airbnb through new legislation.

Faced with a shortage of affordable housing and skyrocketing rents, governments and local authorities around the world are imposing stricter regulations on short-term rentals.

Yet, these regulations, including virtual bans, have not significantly resolved the issue.

We examines how this situation is unfolding in the US and European countries:

US authorities are regulating and even banning short-term rentals

In the US, cities have increasingly imposed restrictions on short-term rentals, driven by concerns that these platforms contribute to rising rents and limited housing stock.

For instance, Irvine, California, implemented a ban on short-term rentals like Airbnb and Vrbo in residential zones in February 2021, citing the rising cost of living and increased congestion in neighborhoods.

New York City has also taken bold steps by implementing the stringent Local Law 18, which came into effect last year.

This regulation has virtually banned Airbnb by stipulating that hosts are required to be present during stays of fewer than 30 days, and limiting rentals to two guests per listing while mandating that hosts register with the city.

The US has also seen a mosaic of regulatory approaches. Santa Monica, San Francisco, Jersey City, Nashville, and Boston have all implemented varying degrees of regulation to control the proliferation of short-term rentals.

However, while some local housing markets have experienced slight stabilizations, the overall impact on rent prices remains debated.

Europe has largely responded with caps

Across Europe, cities have similarly struggled to balance the benefits of short-term rentals with the need for affordable housing.

Barcelona, for example, has taken a drastic approach. In June 2024, the city’s mayor, Jaume Collboni, announced plans to ban new short-term rental licenses entirely by November 2028.

Airbnb listings in Barcelona have surged by 42% since 2015, a trend that has exacerbated the city’s housing crisis by removing thousands of apartments from the long-term rental market.

This initiative aims to reclaim 10,000 properties for residents, a move that Collboni said addresses “Barcelona’s biggest problem.”

Vienna is following suit with regulations set to start in July 2024, limiting tourist rentals to 90 days annually.

This aligns with measures in cities like Berlin, where Airbnb hosts must obtain permits for full property rentals and adhere to a 90-day cap for second homes.

Failure to comply with these rules can result in hefty fines, reinforcing the seriousness with which authorities are tackling the issue.

London also imposes a similar 90-night limit per year without a change of use application, ensuring that properties remain primarily used for long-term residents.

Have strict regulations worked?

In New York, the law’s impact has been far-reaching; according to AirDNA, the number of Airbnb listings for stays under 30 nights in NYC fell by 83% from July 2023 to July 2024.

However, while this resulted in fewer short-term rentals, the law’s ultimate goal—to convert these units into long-term housing—has not been fully realized.

One year after the contentious regulation was introduced, New York’s rental market remains tight, according to an in-depth investigation done by Skift.

Although the number of short-term rental listings plunged dramatically, the overall impact on affordable housing has been modest.

Median rents in NYC have increased less than 1% since the law’s enactment, but one-bedroom rents hit a record high of $4,500 per month, illustrating how multiple factors beyond Airbnb are influencing housing affordability.

The city’s hotel industry, however, has seen a boom, with local tourism projections showing an increase in visitors.

Further, the hit to Airbnb’s business in NYC has forced individual hosts to scramble to cover mortgage payments or rent.

Meanwhile, some condo owners have continued to profit from short-term rentals due to a loophole in the law.

Additionally, an underground market for short-term rentals has emerged, offering minimal, if any, protections for guests.

The experts weigh in: is Airbnb the main culprit?

A study by the Harvard Business Review earlier this year revealed that while short-term rentals do contribute to rising rents, they are not the primary driver.

“Put simply, restricting Airbnb is not going to be an effective tool for solving the housing-affordability problems in many US cities,” the report noted.

The study found that Airbnb’s presence increased annual median rent by only $125, a small portion of the broader surge in housing costs.

In the UK, research by EY found little correlation between the rise in Airbnb listings and increased housing costs.

Despite widespread concern, entire homes listed on Airbnb account for less than 0.7% of total housing in the country, and most hosts rent their homes for fewer than three days per month, the report said.

Listings active for more than 90 nights per year represent just 0.17% of the housing stock, further underlining the minimal impact on overall availability.

Airbnb’s defense

Seeking to quell allegations of rising Airbnbs causing the UK’s affordable housing shortage, Airbnb said,

“It is widely acknowledged that the UK has failed to build enough homes to keep pace with demand pressures for years, with independent estimates finding that the UK has a shortfall in housing supply of around 5 million homes.”

Meanwhile, Airbnb data found that the majority of hosts in the UK list one space, and 40% say that the extra income helps them to afford their homes. 

In NYC, one year after the stringent law was enforced, Airbnb asked city authorities in September to reconsider the regulations citing higher prices for travelers and zero impact on the housing market.

Airbnb, referencing Apartment List data, pointed out that apartment vacancy rates have remained steady at 3.4% since the law’s enactment.

Additionally, Airbnb highlighted that travel expenses have risen, with hotel rates in NYC increasing by 7.4% year-over-year in July, surpassing the 2.1% national rate reported by Co-Star.

Searching for middle ground

While outright bans may seem like a direct solution, experts advocate for balanced regulations that address both housing needs and economic benefits.

“Caps on the number of nights a property can be rented, such as London’s 90-day rule or Amsterdam’s 30-day cap, offer a practical middle path,” said a policy analyst.

These measures allow occasional hosts to earn supplemental income during high-demand periods, without incentivizing investors to take properties off the long-term market.

Neighborhood-specific caps, like those in San Diego’s Mission Beach, ensure short-term rentals don’t dominate local housing.

However, experts caution that enforcement remains a challenge for many cities with limited resources.

Requiring platforms to share data and adhere to local laws can streamline monitoring, as Airbnb and VRBO already collect extensive information on rental activities.

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