The war between AIRBNB and the large conurbations (including Nice) continues to rage. In a new ruling handed down by the Court of Justice, the city of Paris has just won an important battle.
I What is at stake in the real estate dispute: the conformity of the regulation subjecting seasonal rentals to a city authorization
As a reminder, in certain agglomerations the law provides that each owner must apply for authorization to put his property up for seasonal rental. In Nice, for example, the authorization given is for a maximum of six years and is non-renewable. In addition, companies must offer compensation with commercial premises. For natural persons, compensation is compulsory from the second property onwards.
In the present case of the CJU ruling, the question asked by an owner in the 7th arrondissement of Paris was whether the regulations of the city of Paris imposing on each owner a compensation with commercial premises was in conformity with European Union Law and in particular the Directive 2006/123 relating to contracts in the domestic service sector.
II The procedure
A Parisian apartment owner (7th) usually rents out his second home on the AIBNB platform without prior authorization from the City of Paris and therefore without compensation.
In summary proceedings, the Paris Judicial Court condemns the owner to a fine and orders the return of the property in question to exclusive residential use.
This decision is confirmed by the Paris Court of Appeal.
The owner then referred the matter to the Court of Cassation to ask whether the regulations of the City of Paris complied with European Union law.
The Court of Cassation referred the matter directly to the Court of Justice of the European Union (CJEU).
III the decision of the Court of Justice of the European Union, an overriding reason of general interest
The Court’s decision is clear: “A national regulation requiring authorisation for the repeated letting of premises intended for short-term accommodation to transient customers […] is in conformity with Union law”.
In order to justify this decision, the Court specified that the regulation “is intended to establish a mechanism for combating the shortage of housing intended for long-term rental […], which constitutes an overriding reason relating to the public interest”.
Thus, the objective pursued could not be achieved by a less restrictive measure than the one proposed by the City with regard to the need to combat the shortage of housing for long-term rentals.
However, the judgment does qualify the proportionality of the criteria used for the obligation to provide compensation in the form of conversion of commercial premises into residential premises.
The Court explains that it is up to the national court to verify whether the option of compensation actually responds to a shortage of housing intended for long-term rental, observed on the territory of these municipalities. Then, the national court must ensure that this same faculty proves to be adapted to the situation of the local rental market but also compatible with the exercise of the rental activity in question.
The appearance is thus saved for AIRNB which will be able to hide behind this reservation to claim that the decision of the Court is also favourable to it. The Californian firm has indeed indicated that “this decision which will clarify the rules for guests sharing second homes in Paris”.
Let there be no mistake, the situation is nevertheless quite clear: when it is in the general interest to preserve the long-term rental market for residents, large cities do have the possibility of sanctioning owners who do not comply with requests for authorization.
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