Nearly a year after New York City began enforcing short-term rules that were seen as so restrictive thousands of Airbnb hosts dropped their listings, the headlines over new regulations this summer have grown even more extreme.
In Barcelona, where locals troubled by rising property costs took to dousing tourists with water guns, city officials said they plan to ban short-term rentals within four years. In Hawaii, Maui is looking to phase out short-term rentals in its apartment districts starting next year.
Then there’s Valencia, a four-hour drive south from Barcelona along Spain’s Costa Dorada, or Golden Coast. Amid talk of “unorderly growth” and “damaging effects” during public meetings, officials passed new regulations this month that include an eye-popping fine on illegal rentals of as much as €600,000.
But what might look like another step back for the industry may instead be a path toward a more equitable solution, one that falls in line with ongoing efforts in the European Union. Because while the maximum fine makes for good headlines, short-term rental professionals see much to like in Valencia’s provisions, which require licensing, safety and insurance compliance.
With its long, sandy beaches, Valencia has long been a popular getaway for tourists from colder climates and Spaniards who seek cooler Mediterranean breezes in summer. With lots of apartments that were mostly second residences, it was fertile ground for the Airbnb revolution of short-term rental growth.
Valencia now reports 105,000 registered tourist rentals, more than double what it had in 2015. Officials said the region of about 800,000 could have an additional 50,000 unregulated short-term rental apartments along with 5,000 rooms for rent, which had already been illegal in Valencia.
For some people in those communities, they feel like the balance is tipped too far, and ... short-term rentals seem to be the easy target.
Merilee Karr — UnderTheDoormat Group
The rules are about achieving “balance for everyone,” said Alex Penades, chief marketing officer at Valencia-based Avantio, a vacation rental management software specialist. They help ensure landlords and surrounding businesses make more money, the government collects more taxes and tourists have more choices about where to stay.
“I think it’s ultimately going to be good for everyone,” said Penades, who grew up and still lives in Valencia. “This is a great opportunity to do things in a way where we can still create wealth, and the wealth is redistributed to the different stakeholders, so everyone’s got a piece of the pie.”
Best of all, Valencia’s rules don’t represent the sort of rash response that has threatened the industry elsewhere.
“There's a number of cities or places where you see this kind of backlash against tourism. Full stop. Not just a backlash against short-term rentals,” said Merilee Karr, founder and CEO of UnderTheDoormat Group, a global short-term rental company that comprises Veeve, Hospiria and TrustedStays.
“For some people in those communities, they feel like the balance is tipped too far, and politicians are trying to respond to that,” added Karr, former chairperson of the UK Short Term Accommodation Association. “And they respond with whatever they feel like they can easily do, and short-term rentals seem to be the easy target.”
But are they the right target? While short-term rentals make for an easy scapegoat for rising housing prices in tourist-heavy locations, researchers have found their genuine impact to be minimal.
That’s part of the reason Karr and other industry leaders are looking to the framework under development by the European Union as a solution that serves government interests while still warranting a nod of approval from the likes of Airbnb.
Under the regulation approved in April, short-term rental platforms must share data with local authorities while also making random verification checks to prevent illegal listings. With more than a million properties on Airbnb — more than any other region in the world — any measures that take root in Europe could prove influential elsewhere.
“We welcome progress on EU-wide short-term rental rules, which is good news for the EU’s travel economy and many everyday hosts who share their homes to boost their income and afford rising living costs,” said Georgina Browes, head of EU public policy at Airbnb. “As we move forward, we continue to encourage the EU to focus its discussions on disproportionate local rules that undermine the single market and prevent many everyday Europeans from sharing their homes and benefiting from visitors to their communities.”
The law is set to go into effect in May 2026. Karr believes the cities in Europe that implement bans or other harsh restrictions on short-term rentals will eventually have to walk back those measures or risk legal challenges that the EU rules could make difficult to win.
“But it will take years,” she said. “At the end of the day, politicians need something to show to their constituents that they're doing something. So even if they get taken to court, and three years down the road that rule disappears, they've already destroyed the industry in that city.”
Short-term rental restrictions gaining momentum
While regulations for short-term rentals are nothing new, their numbers — and in some cases severity — appear to be gaining momentum, said Daniel Guttentag, an associate professor at the College of Charleston and director of the school's Office of Tourism Analysis.
“There's certainly sort of a snowball effect as more cities start to regulate short-term rentals more aggressively and more effectively,” Guttentag told Travel Weekly, a fellow Northstar Travel Group publication. “We're definitely seeing a phenomenon where policymakers are becoming more skilled and successful in regulating Airbnbs.”
In June, Barcelona mayor Jaume Collboni pledged to ban short-term apartment rentals in the city by November 2028, a move that is expected to strip more than 10,000 apartments of their short-term rental licenses.
Meanwhile, the Maui Planning Commission unanimously voted last month for a proposal that could eliminate 7,000-plus of the island's more than 13,600 short-term rentals. If approved by the county, the ordinance would phase out short-term rentals in “apartment districts” located primarily throughout west and south Maui starting next July.
There's certainly sort of a snowball effect as more cities start to regulate short-term rentals more aggressively and more effectively.
Daniel Guttentag — College of Charleston
As in New York City, policymakers in both Barcelona and Maui are positioning these regulations to boost housing affordability and supply, aiming to transform short-term rentals into long-term housing inventory.
Regulating short-term rentals is easier than putting into housing strategies that might make a lasting impact, said Madeline List, a senior analyst with Phocuswright.
“It's a much quicker way of increasing the housing supply, at least in the short term, than funding major projects that could take years and years,” she said.
“There are some places where the short-term rentals are primarily luxury housing and wouldn't constitute affordable housing,” List added. “But then you do get other markets where people are buying properties that could be affordable housing and are converting them to short-term rentals.”
Both List and Guttentag cautioned against viewing short-term rental restrictions as a permanent solution to housing affordability challenges.
“It's sort of inevitable that Airbnb is going to have a negative impact on housing or rent costs,” Guttentag said. “But at the same time, analyses have found that while it does have an impact, those impacts are relatively small.”
Studies: Minimal impact from short-term rentals
Those analyses include a June 2023 study from Oxford Economics that concluded short-term rentals had a minimal impact on housing prices and rents compared with other factors like income levels and unemployment.
“Housing prices would have been only $800 lower, and monthly rents would have been only $5 lower in real terms if [short-term rental] density had not increased,” the report concluded.
The report went on to say over-regulating short-term rentals could harm local economies by reducing visitor spending. “Finding a balance between [short-term rental] regulation and economic vibrancy while addressing housing concerns is crucial,” it stated.
Subscribe to our newsletter below
A similar study in February from Harvard Business Review concluded “it’s much more likely that the tight housing market in major cities is a bigger contributing factor to increases in annual rents than short-term rentals.”
The report found the ideal regulations for short-term rentals strike a balance between benefits to tourists and hosts and concerns for neighborhoods. “This can be accomplished with limits — rather than outright bans — on when and where housing units can be rented out to travelers.”
London, for example, limits short-term rentals to 90 days per year. In Amsterdam, the cap is 30 days. The limits permit hosts to make extra money by renting their properties during periods of peak demand — a time many locals may want to leave for holiday anyway — while making the properties less attractive to investors, which the report singled out as the biggest concern with short-term rentals related to housing prices.
A framework to work within
Despite the research, Guttentag predicts short-term rentals haven’t seen the last of crippling regulations.
“We're going to see other destinations follow the lead that we're seeing in places like New York and Barcelona,” he said. “And yes, that will probably help ease the rent or housing costs a bit, but it’s not going to fix those issues. New York City is not going to suddenly become a cheap place to live. Barcelona isn't going to suddenly become a place where everybody's finding affordable housing. There are just too many other factors at play.”
If we get rid of the vacation rental offerings, all that’s left is very high hotel prices, and that’s an impossibility for every class of tourists.
Alex Penades — Avantio
That’s why short-term rental professionals point to legislation like Valencia’s as a better approach. “I’m not sure Valencia has got that 100% right, but they're at least 50% there,” Karr said. “At least you've got a framework you can work within.”
And it’s a framework that strikes a balance among tourists, hosts and cities, especially in Europe with its tourist-dense old towns filled with properties that are expensive to maintain.
“The people who live there should have the right to earn an income when they're away on holiday,” Karr said. “And it's a really good income, which allows them to afford to live there and to invest in their properties and keep them nice.”
Outright bans risk cutting out families and others who need more space or lower-cost options, Penades said.
“I hope there will still be a wide range of prices, from more affordable to more luxurious,” he said. “If we get rid of the vacation rental offerings, all that’s left is very high hotel prices, and that’s an impossibility for every class of tourists. We need more supply of houses and apartments to at least have the option.”
*Christina Jelski of Travel Weekly, a fellow Northstar Travel Group publication, contributed to this report.