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Governments are targeting short-term 'AirBnb'-style rentals. But the absence of a comprehensive framework risks backfiring, as investors keep exploiting legal blind spots. (Photo: Alan Denney)

Analysis

'Mid-term rentals': the new haven for investors to keep ahead of housing regulations

Free Article
Governments are targeting short-term 'AirBnb'-style rentals. But the absence of a comprehensive framework risks backfiring, as investors keep exploiting legal blind spots. (Photo: Alan Denney)

As traditional hotels in hotspot tourist destinations can be expensive, short-term rentals such as Airbnb have boomed in city centres across Europe — putting pressure on the housing market and displacing residents from their own neighbourhoods.

Local administrations have led the fight against the uncontrolled rise of accommodations listed on platforms such as Airbnb. Regulations such as licensing restrictions in Athens or Barcelona and night caps in Amsterdam or Paris are becoming increasingly common.

Mounting pressure on short-term rentals is squeezing the profitability of housing investments, but investors appear to have found a new opportunity, so-called 'mid-term rentals' (which can go from 30 days to up to a year).

Increased student and worker mobility, combined with a regulatory gap that often overlooks stays over 30 days, has made temporary rents an increasingly profitable option for property owners or real-estate investors.

While the EU is pushing to regulate short-term rentals, the absence of a holistic approach to real estate market regulation risks deepening the ongoing housing crisis for residents.

How short-term rentals fueled housing crisis

Platforms like Airbnb emerged as a new form of the "collaborative economy," allowing homeowners to earn extra income by renting out underutilised rooms or their whole residence while away.

However, the professionalisation of short-term accommodation rentals, where properties are first purchased and then operated for profit, has led academics to warn that these platforms are far from any longer being a community-based model for sharing idle space.

As of the beginning of this year, Paris by far leads as the European city with the most accommodation offered on the platform, with over 91,000 rooms and houses. Southern European cities also hold top ranks in rooms and houses, ranging between 12,000 in Florence and almost 35,000 in Rome.

The professionalisation of short-term rentals is reflected in the number of rentals owned by the same users on the platform. 

In all eight southern European cities analysed by EUobserver, between 50 percent and 70 percent of accommodations are managed by hosts with several properties — a strong indicator that these users are engaging in commercial activity rather than simply sharing unused space.

The impact of Airbnb on housing shortages is particularly severe in historic city centres. 

Spain’s most popular cities show a striking concentration of short-term rentals in the most-desired neighbourhoods — with Airbnbs making up 20 percent of the housing stock in Madrid, 10 percent in Barcelona, and up to 85 percent in Málaga, according to recent findings.

Reports from Italy reveal similar trends, with 25 percent of Florence’s historical centre listed on Airbnb.

In response, many governments have been taking measures trying to protect the stock of long-term rental housing for residents.

How governments have responded to touristification and housing displacement

Cities facing intense pressure on their housing markets have required Airbnb hosts to register their properties before starting commercial activity. 

In Spain, despite it being mandatory to publish the licence number in listings, 84 percent of entire-unit listings in Madrid and 28 percent of listings in Barcelona had the licence field left empty, according to EUobserver’s analysis.

While this doesn’t necessarily indicate that all those listings are irregular, just recently, Spain’s ministry of consumer affairs ordered Airbnb and similar platforms to remove over 65,000 illegal short-term rental listings across the country, further increasing pressure.

Cities, such as Paris, Amsterdam, Berlin, and Lisbon, have implemented night caps, setting a maximum of 30 to 120 nights per year during which the entire-unit accommodations (whole apartments and houses) can be rented.

The emergence of poor-quality accommodations has also pushed authorities to impose safety measures and quality standards. Athens, for instance, had to ban windowless basements and renovated warehouses, which were booming due to high demand.

Italy has made it mandatory for hosts to meet their guests in person. In Florence, key storage boxes have been banned, not only to preserve the appearance of historic areas, but also to force a minimum level of human interaction between hosts and visitors.

Last year, the EU put forward Regulation 2024/1028 to enforce state-level data collection to improve monitoring of short-term accommodation rental services. Obligations will enter into force from 2026.

The EU parliament's Socialists & Democrats group also recently published a report calling on the newly-created housing commissioner, Dan Jørgensen, to take further action, advocating for standardised rules across Europe to better protect consumers and prevent the continued displacement of residents.

Pressure is mounting on short-term rentals in an effort to free up some current options for long-term rentals, but investors appear to have found an even more lucrative investment opportunity: mid-term accommodation rentals.

Investors bypass housing rules through regulatory gaps

“The short-term rental business in major French cities is no longer for the faint of heart or the under-informed,” reads an article from a property investment consultancy.

Pressure on short-term rentals has driven investors to seek more profitable and less restrictive alternatives. Many have turned to the relatively lightly-regulated market of accommodation for students and mobile workers, who typically stay for periods ranging from one month to under a year.

“Mid-term furnished rentals have become a sweet spot in cities like Paris and Nice. [...] They’re perfectly legal, more stable than short-term lets, and carry fewer maintenance headaches,” the consultancy article continues.

In 2018, France introduced the Bail Mobilité, a rental contract that applies to stays longer than 30 days in fully-furnished properties. While hosts must ensure that tenants provide proof of temporary mobility, these rentals do not require a licence, are exempt from zoning and night cap restrictions, and are not subject to the tourist tax.

During the Paris Olympics, reports showed a surge in temporary rentals under the Bail Mobilité contract, with some properties offering just a few nights' stay at the price of a full month, generating revenues of up to €2,500 for just a three-night booking.

In cities like Paris, Berlin, and Barcelona, between 18 percent and 28 percent of Airbnb whole property listings have a minimum stay of 30 nights or more.

While Airbnb has been the go-to platform for short-term rentals for tourists, the top two hosts with the highest number of properties offer only rentals with a minimum stay of over 30 days.

Companies like Blueground and Ukio have built successful models by leasing long-term apartments from homeowners and subletting them as mid-term rentals. These listings are then advertised on their own platforms as well as through third-party sites like Airbnb.

Could mid-term rentals become the new norm?

The appearance of these type of accommodationis in Airbnb could be just the tip of the iceberg, as mid-term rentals are spreading across all rent-seeking platforms. In Berlin, temporary rentals now make up between 64 percent and 70 percent of listings in the city’s most sought-after neighbourhoods.

In Barcelona, academic research revealed that mid-term rentals grew from representing 1.9 percent of the total housing stock in 2018 to 7.1 percent in 2023. The analysis has discovered that in non-niche rental platforms mid-term rentals represented 42 percent of listings in 2024, a 48-percent rise from the previous year.

According to the same research, the lack of regulation, combined with the post-Covid-19 surge in remote work and mobility, has fuelled demand for these types of mid-term rentals.

The boom accelerated after Spain introduced new restrictions on long-term rentals to control prices, pushing some property owners into the legal vacuum between short and long-term rental contracts.

Just one month ago, the Catalan parliament passed legislation to impose price caps on seasonal rentals (traditionally used for summer holidays) in an effort to close this loophole.

Mid-term rentals are increasingly seen as a haven for investors, adding further strain to an already scarce housing supply for long-term residents in city centres.

The pressure that short-term rentals apply to the housing market is far from being solved. Efforts from both local and national governments, and even the newly-established housing commissioner, could backfire if the rental market is not tackled as a whole.

 “A coherent and robust regulatory approach is essential to ensure that housing markets remain accessible and functional, particularly in high-demand urban areas,” states the European Housing Action Plan, which mayors from across Europe shared with EU Commission vice-president Teresa Ribera and commissioner Jørgensen at a meeting in May.

Real-estate investors appear to be adapting quickly to evolving market trends and technological developments, taking advantage of legal loopholes and staying one step ahead of regulation.

Will administrations be able to catch up and address the housing crisis in a truly holistic way?


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