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Barcelona is banning Airbnbs. Other European cities have cracked down already — with some success.

Aug 11, 2024, 18:41 IST
Business Insider
Getty Images; Jenny Chang-Rodriguez/BI
  • Barcelona is the latest global city to effectively ban short-term rentals, including Airbnb.
  • City officials feel restricting tourist rentals helps keep housing affordable for local residents.
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In July, thousands of Spaniards took to the streets of Barcelona to protest overtourism. Protesters squirted water from toy guns at visitors sitting at sidewalk cafés.

The demonstration was the culmination of years of surging visitor numbers and rising housing and other living costs in the seaside metropolis. Barcelona's mayor has declared skyrocketing rents and home prices the city's "biggest problem."

Many experts say short-term rentals, including Airbnbs, are part of the problem, restricting local housing supply and driving up prices. A study published in 2020 found that Airbnb activity had increased rents in the most popular Barcelona neighborhoods by 7% and pushed up home prices in those areas by 17%.

Following a partial ban on short-term rentals in Barcelona in 2021, earlier this summer, the city announced it would aim to eliminate all of its approximately 10,000 registered short-term-rental listings by 2028.

The move is one of the most severe crackdowns on Airbnb and other tourist rentals in the world.

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But the Spanish city isn't alone. Cities around the world have implemented a range of regulations on short-term rentals to relieve pressure on the housing market and slow gentrification, among other objectives. Major cities like New York, Tokyo, and Vancouver require short-term-rental hosts to live in the homes they rent out. London and Paris limit the number of nights a host can rent out their home per year.

We took a look at three European hubs — Lisbon, Florence, and Amsterdam — that have imposed relatively strict regulations on short-term rentals. In Lisbon and Amsterdam, early data says restrictions coincided with a drop in housing prices. In Florence, the impact isn't as clear yet.

This isn't a new phenomenon. Cities have been worried about the impact of short-term rentals on housing costs for years. But pressure on lawmakers to do everything they can to tamp down the inflated cost of living has pushed many to pursue more aggressive policies in recent years.

The rental platforms have opposed many of the regulations — Airbnb unsuccessfully sued New York City over its crackdown last year. But the company has since appeared more open to a new regulatory standard. "For the last two years, the company has called for an EU-wide approach to short-term rental rules that will help make regulations more consistent across the bloc," an Airbnb spokesman told Business Insider in an email.

Lisbon's Airbnb ban may have kept housing costs down

In early 2023, Portugal suspended all new licenses for short-term rentals as part of a broader effort to alleviate pressure on the housing market from tourists and longer-term foreign visitors.

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But the country's capital, Lisbon, took action much earlier. The city ended new registrations for short-term rentals in some historic neighborhoods in November 2018.

That ban may have slowed the growth in housing costs. In a study published in November 2022, coauthor João Pereira dos Santos, a researcher at the School of Economics and Finance at Queen Mary University of London, found that housing prices in Lisbon neighborhoods subject to the ban declined by 9% compared to control neighborhoods.

But Pereira dos Santos said restricting short-term rentals won't be enough to control rapidly rising housing costs across the city and the country. The country's hugely popular "golden visas" — residency visas for foreign investors — have also boosted real-estate prices. Responding to its housing crisis, Portugal changed the terms of its golden visa program last year to exclude real-estate investment.

A combination of restrictions on tourist rentals and foreign real-estate purchases could be contributing to the slowing growth of housing costs in Portugal.

But in order to continue meeting its elevated demand for homes, Portugal needs to build and renovate lots of housing, Pereira dos Santos said.

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"Given that we do not see, at least in the short- to medium-run, an increase in supply, and if tourism keeps its momentum, I am quite worried that the housing affordability crisis will tend to deteriorate in the following years," he said. "We need to be faster on licensing and rehabilitating housing, from both private and public agents."

Amsterdam home prices have leveled off, but it's unclear if that's due to caps on Airbnbs

Amsterdam's less stringent policy has coincided with a reduction in the number of short-term rental listings.

Instead of a blanket ban, Amsterdam caps the number of nights hosts can rent out their homes at 30 a year.

There are now around 5,000 available listings in Amsterdam, down from the city's peak of 12,000 listings in 2019, according to data from short-term rental analytics site AirDNA.

Recently, home prices have also slightly tapered in Amsterdam. Some experts, though, are hesitant to attribute that dip solely to enforcement of the Airbnb restrictions.

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"Housing prices in Amsterdam have leveled off and have cooled a fair amount compared to the rest of the country. But it's really hard to say whether this was because of the Airbnb rules," said Gregory W. Fuller, an assistant professor at the University of Groningen in the Netherlands.

Fuller pointed to other housing measures in Amsterdam enacted over the same time, like a 2022 ban on investors purchasing homes valued less than $560,000, that eased pressure on the market.

An affordability crisis still persists in Amsterdam, he added.

"The bottom line is just that there is a huge undersupply of affordable housing compared to demand," Fuller said.

Florence just reversed its ban on Airbnbs in the city center

Uneven enforcement and judicial challenges have muddied the impact of Florence's Airbnb regulations.

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In 2023, Florence banned short-term rentals in its historic city center, a two-square-mile neighborhood with iconic Renaissance buildings and museums, in an attempt to improve housing affordability.

From 2016 to 2023, short-term rentals had doubled across the city and rents had risen 42% over the same time period, Florence's then-mayor Dario Nardella told the Wall Street Journal.

But in July of this year, a regional court overturned the ban.

Investors are rushing to capitalize on the moment before the new mayor of Florence can impose new regulations.

Applications for Airbnb licenses in the city center jumped 10% just three days after the ban was overruled, Italian news outlet La Nazione reported.

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"We need a more coherent approach to this phenomenon," said Antonello Romano, a Florence resident and University of Pisa researcher who studies Airbnb's impact on housing.

Romano said there are still visible signs of the Airbnb heyday. Doorbells for some apartment buildings, where families usually display their last names, are noticeably blank, indicating the building may have flipped over entirely to rentals, Romano told Business Insider.

Airbnb is not the root cause of Florence's housing-affordability problem, Romano added. In an increasingly tight housing market, the dominance of short-term rentals acts as an "amplifier," he said.

Romano said he worries about the possible "Venice-ification" of Florence. Visitors to Venice must now pay a day fee and enter the canal-filled city through turnstiles, just like a roller coaster. He worries Florence faces a similar fate.

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