A UNECE study on the sharing economy and its effects on housing markets shows how the massive emergence of temporary rental accommodation through platforms such as AirBnB has changed living habits in cities, and highlights a range of policy and regulatory approaches that can be taken to balance socioeconomic benefits and negative impacts, including on housing affordability.
The study surveyed 43 cities in 17 UNECE member countries such as Athens, Barcelona, Berlin, Dublin, London, Paris, Oslo, Rome, Stockholm, and Vienna. Spanish and Italian cities constituted almost half of all major destinations included in the study, with 10 cities included from each country.
The concept of sharing or collaborative economy when applied to the housing sector involves sharing space in exchange for part of the housing costs. Renting out residential space, whether it is the whole house or part of it, over a short-term period is considered a sharing activity in the housing sector. Popularized by sharing platforms such as AirBnB, such models offer a flexible and efficient way of doing rental transactions.
Balancing impacts on lives, economies and housing markets
Short-term rent activities can have both positive and negative effects which must be fully considered in policy responses, the study highlights. The short-term rental market creates a new business model that can contribute to competitiveness and economic growth. Annual short-term rental revenue amounts to 3-7 billion euros in some cities (Rome (3bn Euro), Paris (4.8bn Euro) and London (7bn Euro) in 2018-2019). The study finds that public finances could benefit from income taxation on these short-term rentals.
Short-term rentals can in particular increase the accommodation offer to tourists, which can make up a significant share of people in cities: for instance in 2018, rental visitors represented 51.8 per cent of the population of Palma. However, this model has also been criticised for has creating “a shadow hotel industry”. In Girona, Majorca and Prague, some 50 per cent of short-term dwellings are managed by hosts with more than five properties.
Among major challenges that have emerged across the region is the effect on the supply of rental units for long-term use due to rising demand for short-term rentals. In smaller cities like Giron and Menorca, the percentage of housing stock used for short-term rentals is as high as 59% and 33%, respectively. Gentrification is a challenge in a number of cities, as price increases due to the proliferation of short-term rentals pushes residents outside the city or to other cities. Other impacts include population agglomeration in city centres, with added pressure on public and health services and transport, as well as noise, pollution and change in the quality of life of neighbourhoods.
These are just some of the factors that should be taken into account in formulating policy measures and adopting regulations for the short-term rental market, according to the study. It further highlights the need for transparency in the number of rental transactions.
In order to better regulate the industry, the study suggests that taxation and occupation fees, differentiating between occasional and ‘professional’ hosts would prevent ‘hotelization’ and keep subsidized and rent-controlled homes on the market for residential use. Measures such as taxing ‘professional’ hosts, setting limits to how long a unit can be listed for and how many units in a building a single owner could list a rental all contribute to regulating and curbing the negative externalities of the short-term housing market. Short-term rental hosts may even be incentivised to build affordable housing specifically for the renting – increasing the economic benefits of the short-term housing market and freeing up more housing opportunities.
The 43 cities and localities included in the study were Amsterdam, Antwerp, Athens, Barcelona, Bergamo (province), Berlin, Bologna, Bordeaux, Brussels, Bristol, Copenhagen, Dublin, Edinburgh, Euskadi-San Sebastian, Euskadi-Bilbao, Florence, Geneva, Ghent, Girona, Manchester, Istanbul, Lisbon, London, Lyon, Madrid, Malaga, Majorca (island), Menorca (island), Milan, Naples, Oslo, Paris, Porto, Prague, Puglia-Bari (province), Rome, Seville, Sicily (island), Stockholm, Trentino, Venice, and Valencia.
The study is available online at https://unece.org/info/Housing-and-Land-Management/pub/371516.