Short-Term vs. Long-Term Rentals: Legal Implications in the EU

Short-term vacation rentals have exploded in popularity all over the world, and they’re especially popular in Europe. That might sound like a good thing — it gives many families and homeowners extra income, and it allows tourists to enjoy an authentic experience. However, until recently, the almost complete lack of regulation was causing problems across the EU. 

The European Parliament aimed to solve that problem. Earlier this year, it passed new regulations designed to promote transparency, protect travelers, and ensure the short-term rental market doesn’t get in the way of reasonably priced housing for city residents. 

Here’s a look at the new European short-term rental regulations and how they compare to regulations on longer-term rentals.

How Are Long-Term Rentals Regulated in the EU?

Landlords in the EU have to follow certain guidelines to ensure tenants have safe, comfortable housing for a fair price. Different countries (and sometimes even different localities) have their own regulations, but in most countries, landlords who rent out traditional, long-term housing must comply with regulations like these:

• Landlords must register and/or be licensed
• Homes, apartments, and other dwellings must meet minimum standards of habitability
• Landlords must not raise rent above a certain price
• Landlords must follow a particular legal process if they want to evict a tenant

In most cases, if a landlord violates a regulation, they must pay a fine. In some instances, they also might face criminal charges.

Why Was There a Need for European Short-Term Rental Regulations?

The recent uptick in short-term rentals isn’t unilaterally negative, but several factors pointed to the need for stronger European short-term rental laws:

Disruption of Residential Neighborhoods

Often, a short-term rental will generate much more income than a more traditional, long-term rental. In some areas — particularly in major cities that are a draw for tourists — landlords’ preference for short-term rentals has jeopardized the availability of housing for residents and has driven up prices.

In some cases, neighborhoods with many short-term rentals (and especially rentals that can accommodate many guests) have also seen a strain on garbage collection and other public services.

Inability to Oversee Rental Listings and Prevent Fraud

Short-term rental platforms sometimes have some level of oversight, but it isn’t enough to completely prevent fraud. Local authorities were unable to access hosts’ information on short-term rental platforms, so they were not able to monitor for fraud on their own.

Inability to Ensure Property Owners Were in Compliance With Local Laws

The lack of transparency that stymied local fraud-control efforts also made it impossible for cities to make sure hosts were paying taxes as needed, adhering to safety regulations, and otherwise complying with the law.

European Short-Term Rental Regulations: An Overview

Whether you’re already managing short-term rentals or are intending to, it’s important to understand the new European short-term rental laws. Adjusting an existing rental business to meet these new requirements can be a challenge, but it will ultimately lead to a safe, more transparent process for everyone.

Fortunately, once the new laws have been finalized, countries will have two years to implement the EU short-term rental rules. Here’s an overview of the main changes being made: 

Hosts Will Be Required to Register

Most countries in the EU require landlords who manage long-term rentals to register. That registration makes it easier for authorities to monitor the landlord’s properties and check for regulatory violations. 

Now, under the new laws, hosts with short-term rentals in EU countries requiring registration will also have to register. The process is a simple one, and it allows local authorities to verify a host’s details without having to attempt to recover information from a short-term rental platform.

Data Will Become Much Easier to Access

In order to truly understand the impact of short-term rentals on the local economy, local governments must first be able to access and monitor relevant data. The new laws will establish a database of host information from various platforms. With this database, local authorities from every country in the EU can log in and see the same data.

However, data sharing can be complicated by the sheer variety of short-term rental platforms. Larger companies will share data through a larger and more complex system. Smaller platforms with comparatively few rental listings will still be required to share data, but they will be able to use a simpler system to do so.

Authorities Have More Power to Monitor Listings 

Some short-term rental platforms will verify host details and even property details. However, if they do either, the verification process is often a one-time event. The new laws order platforms to take a more active role in monitoring fraud, but it’s a team effort between platforms and authorities.

Platforms will be required to verify property details to ensure hosts are not falsely advertising their properties. They also must do random periodic checks to confirm that properties are still being listed accurately. 

Authorities will also be able to monitor listings and registrations. If they suspect fraud or another kind of violation, authorities can stop a host from registering. They also can monitor listings for accuracy and remove them if they don’t comply with registrations.

It’s easy to be skeptical of the requirements imposed on platforms. After all, areas outside of the EU don’t require short-term rental platforms to conduct random checks of listings. However, the new European short-term rental regulations grant local governments unprecedented authority over tech platforms — authorities have the power to impose fines on platforms that don’t comply with requirements.

Protect Your Investment With CoverCat

Short-term rentals can be an excellent way to supplement your existing income, and in some cases, they can even be enough to support you full-time. However, maintaining rental properties is not without risk. At CoverCat, we’re here to help you mitigate that risk as much as possible. We offer insurance coverage to protect property managers and their hosts for guest-caused damage and liability for guest bodily injury.  If you have questions about our coverage or you’re ready to get started, get in touch with us today!