We had the opportunity the have access to this document published by the European Holiday Home Association (EHHA) with
ROADMAP: Short Term Rental in Europe
In summer 2016 the European Commission will publish a Communication on collaborative economy which will feed in the Single Market strategy as published on 28 October 2015. The communication will describe the growth of the collaborative economy sector, current regulation at Member State level and provide guidance on how European rules (such as E-Commerce directive, Services Directive and legislation on consumer rights’ protection) could be applied to the sector.
The European Parliament, in its resolution entitled “Towards a Digital Single Market Act” adopted on 19 January 2016, has stated that it is concerned about the different national approaches taken so far by the Member States on regulating the sharing economy and urges the Commission to take initiatives, in line with EU competences, to support innovation and fair competition, remove barriers to digital trade, and preserve economic and social cohesion and the integrity of the single market.
Short term rental industry and the EHHA
Short term rental is the largest leisure accommodation form in Europe, providing a capacity of more than 20 million beds and an annual turnover of 80 billion euros according to PhoCus Wright’s report “European Vacation Rental Marketplace: 2011-2013”. At the same time, it is an industry with a clear potential to further increase the mobility of travellers all across Europe and to contribute to the economy in ways that benefit hosts, travellers, and local communities. Short-term rental industry boosts local businesses, creates more revenue for tax authorities and more direct and indirect employment opportunities, increases individual incomes, generates more options for tourists and at the same time allows a more optimal use of space.
The EHHA is a membership association which represents the short-term rental sector at both EU and member state levels. Its members are companies engaged in the marketing and distribution of short-term accommodation through both online and offline methods, member state holiday home trade associations, and companies who may provide ancillary services to EHHA members.
Support of the collaborative economy
The short-term rental sector is one of the original components of what is now referred to as the “sharing” or “collaborative” economy. Now powered by the exponential increase in internet connectivity, the short-term rental sector has become part of a fast-growing ecosystem of innovative platforms and services that is driving greater choice and lower prices for consumers. Across Europe, the collaborative economy is spurring the growth of new start-ups, and the reinvention of legacy business models. Even though the channels of distribution have expanded to adapt to consumers’ expectations to have offline and online offers, the short term rental service itself remains essentially the same, having to comply with all the existing applicable rules.
Consumer demand for choice in accommodation – for both business and leisure travel – has made private rental and privately-owned holiday homes, cottages, apartments, spare rooms or even castles by far the largest volume of accommodation available in Europe.
The short term rental industry has become a huge contributor to tourism and the European economy. For example, 3.7 million visitors staying in a short term rental accommodation in 6 major cities in Spain in 2013 contributed with 2.7 billion euros according to a study made by ESADE and Fevitur. In Denmark, 54% of all foreigners’ overnight stays were spent in a short term rental accommodation making it the largest accommodation capacity for tourism. In the UK, the self-catering sector is a very important component of the UK domestic tourism industry, accounting for 21% of the 114 million trips taken each year and responsible for 23% (£5.2bn) of the £23bn per annum that domestic tourism provides to the UK economy. This revenue directly provides 96,000 full time equivalent (FTE) jobs.
The EHHA supports the approach taken recently by the Commission that focuses on the ways in which existing law already applies to the collaborative economy, and how any new guidance can be introduced to support the development of the industry in Europe.
Guiding principles for short-term rental regulatory frameworks
In order to help improve understanding of the diverse short-term rental sector in Europe, EHHA highlights a number of key issues for consideration in the next phase of the EU’s work on the collaborative economy:
- Ensuring a regulatory framework that is fit for the sector’s diversity:
The short-term rental sector is hugely diversified: in terms of the type of accommodation available (from cottages to apartments, to houses and even castles), the type of consumer being catered for (whether business or leisure, families or couples, young or old, luxury or value-conscious), the location of the accommodation (from mountain to seaside, rural to city) and the business model of the provider (peer-to-peer or business-to-consumer, online or offline, professional or non-professional). Each combination presents different challenges and demands different approaches. And given the fact that so many of the policy issues under consideration are tackled locally by the EU’s member states, it is neither possible nor expedient to create a “one-size-fits-all” approach. Instead, Europe should focus on ensuring a robust regulatory guidance for these issues, where local regulation is set appropriately for the relevant context, and enforced fairly and consistently.
- Focusing on innovative and effective regulatory models:
The EHHA highlights that the main objective of the Single Market is to provide a regulatory framework that fosters the free movement of services and enhances the competition by removing existing barriers and promoting a business and consumer friendly environment based on transparent, simple and consistent rules offering certainty and clarity.
Article 15.3 of the Services Directive requires that service activity should be made subject to authorisation by the competent authorities only if that decision satisfies the criteria of non-discrimination, necessity and proportionality. In general, the EHHA recommends that the main focus of regulators should be on reducing unnecessary burdens and red-tape, not introducing new bureaucracy through ineffective registration or authorisation schemes. We urge the Commission to consider emerging best practices across Europe, where short-term rentals are being appropriately regulated through a range of methodologies. In particular, we note that schemes relying on public registration of homes and apartments are already proving to be excessively burdensome (for providers and for local authorities) and act as barriers to innovation and to emerging peer-to-peer business models.
- Ensuring genuine competition across the accommodation sector:
Regulations that attempt to limit the number of nights a property may be rented, or the maximum number of times it may be rented may constitute an attempt to limit competition. In particular, consumers should have the widest possible choices of places to stay, therefore rules that specify a minimum number of nights that a traveller may stay in short-term rental accommodation represent the most disproportionate and anti-competitive measures.
Equally, there have been calls for unique obligations to be applied exclusively to short-term accommodation – such as mandatory notifications to neighbours and building owners, or specific provisions about antisocial behaviour or nuisance. The EHHA believes that the outcomes sought by such obligations are best delivered through the effective application and enforcement of existing laws that apply to all kinds of residential accommodation, rather than the creation of entirely new frameworks that are applied only to one segment of the accommodation sector.
- Recognising the industry’s commitment to safety and security:
Basic safety and security rules for short-term rentals are already in place. Property used for short-term rental is already subject to regulation – either through locally-approved fire regulations, building codes or rules governing short- or long-term paid accommodation. This approach accurately reflects the fact that – especially in the case of property that is used as non-tourist accommodation for part of the year – this remains residential property that already needs to be compliant with relevant safety law. An apartment used occasionally for tourists is very different from a hotel, and it is right that regulations are designed and applied in a proportionate and considered way.
- Ensuring the short-term rental sector meets its fiscal obligations
EHHA agrees that income generated by providers of short-term rental accommodation (whether as a business, or as an individual) should be subject to appropriate fiscal scrutiny. Companies that distribute and market short-term rentals already encourage their users to comply with all relevant tax and fiscal obligations, but are usually in no position to ensure compliance. For this reason, companies that distribute and market short term rentals should not be held liable for individuals found not to be declaring the right amount of tax. The responsibility of developing tax rules for the sector rests with governments, and we encourage them to design systems that are easy to understand, and straightforward to comply with.
EHHA members affirm that they are open to solutions which would allow for easier collection and remittance of relevant tourist or accommodation taxes, provided that simple, straightforward and fair systems are put in place to enable that outcome. This can be a complex task: for example, there are around 2,000 local tourist taxes in France, which makes collection and remission of accurate amounts extremely challenging. Moreover, some European systems place the obligation on the guest to pay the tax, while others make it the owner’s responsibility to collect it.
EHHA stresses that tax compliance – whether income tax or tourist tax – will be more effectively ensured if governments take the lead in simplifying and communicating the rules in ways that can be understood by those engaged in small-scale trading, as well as those running more established businesses.
- Accurately reflecting the status of providers of short-term accommodation
Some providers of short-term accommodation are indeed businesses – and will employ people just as any other business does.
However, in the growing segment of “rental by owner” accommodation, the status of the provider is different. This kind of host is not “employed” in the rental business, and the platforms and channels through which they attract guests – such as online booking platforms or classified advertising – are not their “employers”. Many will already have employers or businesses, and their short-term rental activity is an additional stream of income that does not replace or detract from their everyday work. So while there may be some emerging challenges about the rights of “workers” in the wider collaborative economy, the EHHA notes that these issues are rarely of any direct relevance to providers of short-term accommodation.
The EHHA supports the objective of the Single Market, and a European regulatory framework that fosters the free movement of services and enhances competition by removing unnecessary barriers, promoting an environment that benefits both businesses and consumers. In the accommodation sector, the EHHA seeks the application of existing rules and regulations in a way that delivers genuine competition and provides short-term rental providers – big and small, professional and non-professional – with a simple, clear and appropriate set of rules that are as consistent as possible across Europe.
EHHA believes that, in full respect of the subsidiarity principle, there is a need for a European harmonized regulatory framework, which would avoid a patchwork of different national, regional and even local rules and steer best practices across the EU. Legal certainty increases trust for businesses and consumers alike and contributes to the economic development.
We seek a playing field that is fair and proportionate, reflecting a diversity of business models rather than trying to regulate every form of accommodation as if it is the same. In other sectors, regulatory frameworks already reflect the very different combinations of issues raised by different kinds of product or service. For example, a consumer choosing a mode of transportation between two cities could select any number of options: to drive themselves, to take a bus, to take a train, to take a ship, or to fly with a commercial airline. In each case, the regulations have been designed specifically to protect the consumer in that context. A consumer would not expect the rules to be exactly the same in each case, and EHHA believes that the same is true for the huge diversity of accommodation choices available to consumers.
Ultimately, EHHA wants to see Europe’s attractiveness as a destination for all kinds of travellers grow. The best way to achieve this is for Europe to embrace innovation, promote diversity in the travel industry, cutting red-tape for businesses and ensure maximum choice for consumers. To maintain effective competition and ensure that consumers are adequately protected, we look forward to working in collaboration to develop fair, proportionate and pro-growth regulatory frameworks that are fit for the future.