The ECJ has upheld a French law requiring landlords to obtain prior authorisation from local authorities for short-term property rentals.
The ECJ delivered its judgment in the joined cases of Cali apartments and HX. The two landlords were fined €15,000 and €25,000 respectively by the city of Paris, for having let properties through Airbnb without authorisation. Two years ago, the case was escalated by the French Supreme Court, la Cour de cassation, to the ECJ.
The appellants argued that the local authority's requirement of prior authorisation and more specific requirements contravened Directive 2006/123/EC on services in the internal market. Articles 9 and 10 of the Directive set out the requirements for the use of authorisation schemes and for their specific criteria respectively.
The ECJ found that "dealing with the worsening conditions for access to housing and the exacerbation of tensions on the property markets (...) to protect owners and tenants, and to increase the supply of housing while maintaining balanced land use" and was an overriding reason relating to the public interest within the meaning of Article 9(1)(b) of the Directive. In light of this, and supporting evidence on the gravity of the issue, the Parisian authorisation scheme was found to be justified.
The ECJ pointed out that paragraph 1 of Article 10 provides that “authorisation schemes shall be based on criteria which preclude the competent authorities from exercising their power of assessment in an arbitrary manner”, while paragraph 2 lists “non-discriminatory”, “justified by an overriding reason related to the public interest” and “proportionate to that public interest objective” among these criteria. The ECJ considered the Parisian authorisation scheme to be in line with these criteria and by extension, justified.
As such, the French law was upheld by the ECJ. Mayor Anne Hidalgo tweeted: "This victory, awaited by many cities, marks a turning point for the supervision of seasonal rentals and constitutes a step forward for the right to housing for all.” Last month, 21 cities across the EU called on EU competition commissioner Vestager to impose an EU-wide legal framework for short-term rentals.
One of the main arguments for reform of online platform regulation is an alleged lack of transparency when it comes to sharing data. Cities like Brussels argue that “sharing economy platforms” sometimes withhold crucial data needed to enforce local laws on rentals and property tax. However, change may be just around the corner.
Digital Services Act
Later this year, Brussels will publish the Digital Services Act (“DSA”), a body of proposals to modernise the current legal framework for digital services. Under these proposals, sharing economy platforms could be required to share more data with local authorities. However, Vestager warned that: “Better cooperation between platforms and public authorities will be a prerequisite for a proper enforcement.”
“The national rule requiring authorisation for the repeated letting of premises intended for short-term accommodation to transient customers who do not take up residence there is in line with EU law. The fight against the shortage of long-term rental housing is an overriding reason in the general interest justifying such a regulation.”