A new Paris ruling on Airbnb is making headlines here in the French capital.
It’s likely to be of interest to those using the platform to rent out their properties.
While no one knows exactly what impact this ruling will have, it may be a cautionary tale on the risks of short-term rentals in Paris.
Short-term rentals actively discouraged
Airbnb, the American online rental marketplace, is a global success story. Available in 191 countries, it’s the world’s number one choice for vacation rentals.
But its use in Paris has long been controversial. This is due to our city’s equivocal history with short-term rentals.
In fact, this type of ‘micro-rental’ is actively discouraged, for a few reasons.
First, there are concerns about the drain on the capital’s residential property for those wishing to live and work here. Second, the rise of personal vacation rentals has undoubtedly impacted the hotel industry.
Finally, it’s also estimated that 80% of owners do not declare their rental income when using online sites.
Despite all this, for a time Paris was the largest marketplace on Airbnb anywhere in the world, with over 60,000 rentals listed in the capital.
A shift in the online rental market
So, what is the latest controversy?
The case in question concerns a Paris tenant, who sublet their rental property without the landlord’s permission.
Over 537 days between 2016 and 2017, their earnings from Airbnb exceeded the property’s annual rent. This is illegal in France, where the system protects the owner’s rental income.
Together, the tenant and Airbnb are being forced to jointly compensate the landlord. Not only for the rent received, but also legal costs. Airbnb are also instructed to pay back all the commission.
This is only a single case. But it may potentially open the gates to challenge activity in the short-term rental industry.
While reports state that Airbnb will appeal the decision, if the judgment stands it may have repercussions across France.
Whatever the outcome, it seems the online rental landscape in Paris is shifting. This ruling may be of concern to those using the platforms to rent out apartments in the short term.
The Digital Reform Bill 2016
It’s not just the latest Paris ruling on Airbnb. In 2016, the Loi Numérique (Digital Reform Bill) came into law.
This affects Airbnb and all online property markets including competitor sites such as Wimdu, HomeAway, and HouseTrip.
The bill requires the registration of all online rental properties with the local Mairie (Town Hall) to obtain a registration number. This must appear on the online listing. If rental earnings exceed €5,000 a year, income tax is liable.
Failure to comply with this and the other stipulations of the Digital Reform Bill can lead to fines up to €25,000.
We reported on the full legislation and effects of the Digital Reform Bill in this blog at the time.
Advice following the Paris ruling on Airbnb
We understand these rules can be a minefield.
If you are thinking about renting your property, but worry about the local legislation, we are here to help.
Our experienced team can suggest many solutions, while still optimizing your rental income and the return on your investment.
For free advice, please contact the team at 56Paris today.