To heck with the concerns of local citizens and city councils.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Across many of the world’s most popular tourist destinations, from New York to Paris, to Tokyo and Barcelona, Airbnb is suffering a regulatory backlash. In its number-one destination, Paris, authorities have filed a lawsuit against the company for failing to respect local laws regulating holiday rental properties. It has lost thousands of hosts in its home city of San Francisco after the City Council decided to enforce existing accommodation laws more strictly. In New York, its bookings could be decimated by new rules requiring it to hand over the names and addresses of its hosts in the city. All over the world, local authorities are taking aim at Airbnb and its ilk.
But in Spain, Airbnb’s fourth largest market in terms of listings, the National Commission on Markets and Competition (CNMC) has announced that it intends to challenge any attempt by city councils to limit the activity of accommodation websites.
The market regulator also published a report defending the accommodation platform’s model. Across multiple pages the report’s authors laud the copious benefits of short-term holiday rentals, including:
- A broader range of tourist accommodation;
- The opportunity to earn more money for property owners;
- Better information for consumers;
- Enhanced competition in the tourist accommodation market, leading to lower prices (for tourists);
- The empowerment of the consumer.
By contrast, in a solitary one-page section on the “possible” downsides of short-term holiday rentals, the report only mentions a “potential” increase in noise and other disturbances for neighbors. As El País reports, even these elements are played down.
Not a word is said about the effects of the short-term rental boom, resulting in the displacement of local residents from their neighborhoods. Nor is any mention made of the overcrowding and “theme park-isation” of city centers, or the blatantly unfair competition platforms like Airbnb and their hosts engage in by paying a tiny fraction of the direct and indirect taxes hotels and hostels have to pay. As the FT reports, the tax differences are worth tens of millions of pounds in London alone.
Most controversial of all, the report even disputes claims that Airbnb and other holiday rental operators have pushed up the price of accommodation for locals in popular tourist destinations, whether in terms of rents or purchases. “There is no conclusive evidence,” states the text, “although if there has been a general rise of house prices in Spain in recent years, this is due to a confluence of economic factors. […] No evidence exists of a direct and exclusive relationship between the supply of tourist housing and property prices.”
This claim is spurious at best. Thanks to the much juicier money-making opportunities available in the short-term rental market — opportunities the report itself highlights as a benefit — more and more real estate developers, landlords and property speculators are pouring into the market, resulting in a dwindling stock of long-term rental properties. The result: fewer houses for locals and soaring prices for those that do still exist.
That is not to say that the holiday rental boom is the only cause of soaring rents in Spain’s hottest housing markets. Clearly, the rise in rental demand following the burst of Spain’s last real estate bubble has played an important part. So, too, has rampant property speculation, much of it coming from overseas. But to suggest that the increased demand for holiday accommodation isn’t an important factor is exceedingly disingenuous.
Contrary to the CNMC’s claims, three studies from the U.S. and Canada have found direct links between the short-term housing rental boom and surging property prices in New York, Boston and Los Angeles, as well as the expulsion of local residents from popular neighborhoods. It is this trend that has spurred many city councils in Spain to pass laws to regulate the tourist rental sector. But according to the CNMC, these regulations have “restricted the supply of holiday rental units and their ability to compete. As a result, they hurt consumers, local residents and the economy as a whole.”
The CNMC claims to be defending local residents, but in many of Spain’s tourist-saturated cities, as in many tourist-saturated cities in other parts of the world, local residents have already had their fill of “over-tourism.” The streets of Barcelona, Palma de Mallorca and other cities are awash in graffiti and stickers exhorting tourists to “go home.”
Last week, a new poster cropped up in Barcelona informing tourists (in English) that “balconing” — the act of climbing, or throwing oneself off, balconies for fun, as some inebriated foreign tourists are wont to do — is not just fun, but “prevents gentrification and improves the quality of life of local residents.” They even set up a Twitter account — @balconingIsFun — that Twitter has since suspended. The message may be darkly ironic, but the underlying sentiment is unequivocal: tourists are no longer welcome in such huge numbers.
Some of this is the work of Arran, the youth wing of the radical Catalan separatist CUP (Popular Unity Candidacy) party. Many local citizens, while wary of supporting Arran’s more extreme methods, are sympathetic to many of the group’s misgivings about today’s model of unfettered mass tourism. Yet if the CNMC gets its way and Spanish courts, on its recommendations, strike down any attempt by local authorities to control the boom in turning apartments into vacation rentals, local councils will be rendered virtually powerless to regulate the local housing market and city environment in the interest of the majority of people who actually live there. Airbnb could not have asked for more. By Don Quijones.
Bad habits die hard. Read… Consumer Debt Suddenly Surges in Spain, Banks Love it, But Regulators Begin to Fret
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