European Cities Crack Down on Airbnb: Will It Help with Housing Affordability?

Cities like Barcelona, Lisbon, and Amsterdam are implementing strict regulations on short-term rentals to relieve pressure on the housing market and slow gentrification.

AirbnbShortterm RentalsHousing AffordabilityBarcelonaLisbonAmsterdamFlorenceEuropeReal EstateAug 11, 2024

European Cities Crack Down on Airbnb: Will It Help with Housing Affordability?
Real Estate: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.

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.

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.

But Barcelona 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.

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.

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.

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.

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. 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.

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.

Airbnb is not the root cause of Florence's housing-affordability problem, said Antonello Romano, a Florence resident and University of Pisa researcher who studies Airbnb's impact on housing. In an increasingly tight housing market, the dominance of short-term rentals acts as an \

Frequently Asked Questions

What is Barcelona's stance on short-term rentals?

Barcelona has effectively banned short-term rentals, including Airbnb, to help keep housing affordable for local residents.

How have other European cities regulated short-term rentals?

Cities like Lisbon, Amsterdam, and Florence have implemented strict regulations on short-term rentals, including bans and caps on the number of nights hosts can rent out their homes.

Has the regulation of short-term rentals had an impact on housing prices?

Early data suggests that restrictions on short-term rentals have coincided with a drop in housing prices in Lisbon and Amsterdam, but the impact is less clear in Florence.

What is the concern about short-term rentals in Florence?

Florence residents worry that the dominance of short-term rentals is driving up housing costs and contributing to the city's housing-affordability problem.

What is the future of short-term rentals in Florence?

The new mayor of Florence is expected to impose new regulations on short-term rentals, but investors are rushing to capitalize on the moment before the new rules take effect.

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