Six evidence-based policy recommendations to regulate Airbnb

Research has shown that Airbnb and other short-term rental platforms could have detrimental effects for local housing markets. However, policymakers face the challenge of addressing these issues, without withering Airbnb all together. By reviewing policy-evaluation studies from abroad, we present six concrete evidence-based recommendations.

First, a very concise summary of the main research findings from our Air-BRU project. Our research indicates that Brussels’ short-term rental market comprises approximately 12,500 active listings annually, managed by around 9,000 fluctuating hosts. We categorised the short-term rental market in Brussels into four distinct groups: professionals, investors, occasionals, and sharers. Notably, there is a heavy concentration – especially of the professional hosts – in the Îlot-Sacré and the European quarter, both middle-class and highly touristic neighbourhoods. The short-term rental market shows a profound trend towards professionalisation, accelerated by the Covid pandemic. In other words, these professional hosts in Brussels do not align with the original Airbnb philosophy of locals sharing their home for a more authentic tourist experience. Additionally, the growth of the short-term rental market in Brussels has contributed to increased rental prices, but not to house sale prices. Moreover, professional hosts have shown a tendency to discriminate against tourists with Moroccan names in Brussels.

Given these findings and evaluation research from abroad, what are our policy recommendations for Brussels?

We propose Home Sharing measures in the Brussels Capital Region, designed to maximise benefits for smaller hosts (such as sharers and occasionals) while curbing the market’s negative impacts by regulating professional hosts. Recognising that there is no one-size-fits-all solution, and that each policy implementation carries additional potential consequences, we recommend a combination of evidence-based measures.

1. Mandatory registration. Every policy should begin with the compulsory registration of short-term rental listings. This is already a requirement in the ordinance regulating the short-term rental market in the BCR, emphasising the significance of this step as a foundation for implementing further measures. While we recognise the increase in administrative burden, which is most felt by occasional renters and sharers, it remains paramount. We propose a simplified and transparent registration process to facilitate compliance by non-professional providers, ensuring the procedure is as straightforward as possible for all parties involved.

The registration of short-term rental listings forms the foundation for implementing subsequent policy measures within the framework of the new ‘Ordonnantie betreffende het toeristisch verblijf’ (French: ‘Ordonnance relative à l’hébergement touristique’). Article 5 or this new Ordinance allows the government to establish operational standards for various types of tourist accommodations, including short-term rentals. These standards cover aspects like the type of accommodation unit, reception capacity, services and amenities offered, the impact on spatial planning and housing availability, and the social character of the tourist accommodation activity. In the context of Article 5 of the Ordinance, we propose the following evidence-based policy recommendations:

2. One Host, One Home. Limit hosts to offering only one property for short-term rental, verified at registration through legal documentation. This measure aims to directly manage the market’s supply, potentially reducing or slowing growth, thereby indirectly supporting smaller hosts. It encourages the optimal use of dwellings, while it still allows for second residences to be listed, provided they are not primary homes.

3. Maximum Rental Periods. Implement maximum rental durations, varying by host type and location, to prevent properties from becoming investment vehicles. While refraining from specifying an ideal period due to lack of consensus in the literature, we highlight the need for flexibility, particularly around the European Institutions, to accommodate the unique circumstances of Brussels and its expatriate community that frequently leaves Brussels for extended periods.

4. Taxation. Considering the upcoming EU Council Directive 2021/514 (DAC7), we advocate for a tax agreement with short-term rental platforms in Brussels, enhancing tax compliance and market transparency. We propose a convex tax to impose higher tax rates on high-end units, discouraging their conversion to short-term rentals and supporting housing availability.

5. Avoid complete bans. We advise against outright bans on short-term rentals, viewing them as too drastic and legally controversial. Instead, we recommend targeted measures that maintain the market’s positive aspects, such as the additional income it generates for local residents, the stimulation it offers to Brussels’ economy, and the potential positive effects it can bring to neighbourhoods with fewer traditional hospitality businesses, where the short-term market can specifically and disproportionately attract visitors, while addressing its drawbacks.

6. Combating discrimination. To tackle discrimination, we suggest a three-faceted approach: promoting the Instant Booking feature, anonymising host and guest information during initial booking phases, and extending housing inspection activities to include discrimination checks.

In sum, we emphasise the importance of considering the implications of any Home Sharing measures on both the short-term rental and regular housing market in Brussels. Our recommendations are based on careful evaluation of policy implications, underlining the importance of continued research ensuring a thorough understanding of policy consequences. This approach is vital not only for Brussels but also for informing broader debates elsewhere.

The full study and policy recommendations can be found here or here.

Full citation: Te Braak, P., Verhaeghe, P.P. (2024). Policy proposals for regulating the short-term rental market: Towards a balanced housing market in Brussels. Vakgroep Sociologie, Vrije Universiteit Brussel.