European Court Ruling Could Crimp Airbnb Rentals

A European court ruling could put a crimp in Airbnb’s home- and apartment-sharing business on the continent.

The major case is part of the ongoing international battle that pits local authorities across continents against property owners and Airbnb-style services seeking to use their properties for short-term rentals to transients. Technically, Airbnb was not part of this European Union case.

The Court of Justice of the European Union has given a nonbinding opinion in favor of Parisian officials looking to protect the housing stock from being turned into short-term, Airbnb-style rentals.

“The objective of tackling a shortage of long-term housing” can override other considerations, said the court in a prepared statement. Advocate General Michal Bobek of the Luxembourg-based court said the Paris rules, authorized under French legislation, should stand.

The French case was brought by the owners of two studio apartments in Paris. The owners, Cali Apartments and HX, had not gotten permission to turn the apartments into “short-stay furnished accommodation on the Airbnb platform,” the European Union court said.

The ruling came after a French appeals court asked for clarification from the EU about the regulations regarding the provision of services.

According to the EU court, “Property owners who would like to (rent) their furnished accommodation for short stays must follow an administrative procedure to obtain from the mayor, subject to the fulfillment of conditions, a formal administrative authorization.”

Airbnb’s Co-founder and Chief Strategy Officer Nathan Blecharczyk made the company’s case for its business model in a December letter to European mayors: “We fundamentally believe that home-sharing is good for cities and the people who live in them.” He added: “We also want to be good partners to everyone in the communities where we operate, which is why we welcome fair regulations and fundamentally believe that clear rules are good news for all.

According to Courthouse News Service, Paris officials fined both of the apartment owners 15,000 euros ($16,300) for renting them on the Airbnb service. The French officials ordered the owners to turn their properties back into residential use.