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News from the front: Airbnb vs Paris vs the European Union

On January 17, the Paris Regional Court handed down its verdict on the case opposing the City of Paris and the company called “SCI panorama immobilier”: this is an important decision for Airbnb and for Parisian landlords that rent their apartments via the platform. However, this decision could also interest Airbnb hosts elsewhere: it emphasized the fact that the next battle will happen in Brussels.

The case of Airbnb vs Paris is complex: last year the City of Paris lodged a complaint against the company “SCI panorama immobilier”, arguing that the company didn’t comply with “the Law of 6 July 1989 of the Building and Housing Code”.

Among other things, this law stipulates that any change in the use of a secondary residence must first be declared to the town hall; this includes changing from long-term rental to furnished tourism rental for example, meaning the flat leaves the local market to enter that of tourists by being rented on Airbnb. This law also establishes the system of “surface area compensation”: every square meter leaving the main rental circuit, for example for the tourism market, must be compensated for by new square meters entering the main circuit. In other words: the company rented accommodation on Airbnb without informing the Paris City hall about the changes of destination of the flats. Therefore: the town hall files a complaint (since the company did not inform it about the change in use of the apartments, they did not set up the mandatory compensation, a point which is not explicit in the court’s note). The City demands the payment of a 50,000 euro fine for non-compliance with the law. And that is one of the cruxes of the problem. While the company does not dispute the facts, it is nonetheless requesting a stay of payment for the fine, arguing that the European court of justice has been seized with a similar case. They hope that their fine will be cancelled if the national law is found by the European court of justice to be incompatible with EU law.

This is, in fact, just another skirmish in the battle between rental platforms and major European cities including the complaint filed by 13 European cities or regions on October 10, 2018, to the European Commission. More precisely, it is a battle that has moved from national frameworks to Brussels.

Almost all major European cities now have regulations directly linked to Airbnb's activity: in Paris, it is impossible to rent an apartment for more than 120 days (with nuances depending on whether the accommodation is a primary/secondary residence), and it is necessary to request a registration number from the Town Hall (as a consequence of the famous "Airbnb decree" signed in 2016 to apply the law for a "Digital Republic"). In Amsterdam, on January 1, 2019, the limit was increased to 30 days of rentals per year and per apartment. Obviously, all these measures are criticized by the platform. Mr. Aurélien Pérol, who is in charge of communication for the platform in Europe, denounces "lobbying by hotel services unions". It should be noted that Aurélien Pérol is very familiar with the legislation as he worked for the administration that set it up. He previously worked in the office of the Secretary of State for Digital Technology, Axelle Lemaire. Faced with this multiplication of regulations, Airbnb turned to Brussels.

This is explained by a press release from the company dated January 24, 2019: "the European Commission announced today (NB: according to the company's press release) the launch of an investigation to determine whether the cumbersome registration procedure imposed on furnished tourist accommodation in the city of Brussels contravenes European regulations". In particular, the company denounces "heavy" and "disproportionate" local rules. And indeed, the Belgian capital seems to be at the forefront in regulations furnished tourist accommodations: obligation to submit a file to the town hall, with for example a compulsory fire safety certificate, a registration number, a limit of 90 days of rentals per year/apartments... If these regulations are determined to be contrary to EU law, they will logically be contrary to it in all states applying similar rules, the fine levied on the Paris-based company SCI panorama immobilier could then be cancelled.

One of the other problems highlighted by this Paris Court order remains the difficulty for town halls to issue fines for fraudsters, when precisely they already lack the means of coercion to enforce the law. Despite a record number of fines in Paris in 2018, with more than 2 million euros demanded by the Paris City Hall from fraudulent owners, more than 80% of ads on Airbnb are still illegal, and do not give their registration numbers for example (a figure put forward by a survey conducted by the French newspaper Le Figaro). It is therefore a triple blow for the mayor's office: - failure of one of its offensives - which will enable the suspension of all fines - and failure of one of its regulations, put on standby by the EU, even though the city is already struggling to enforce the law.

Needless to say, the town hall does not plan to stop there. Ian Brossat, assistant for housing at the Paris City Hall, and author of the book "Airbnb: an uberized town", is already preparing a new action: "a complaint against platforms that do not respect the law.”

Until the next episode....

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