Airbnb faces backlash in Toronto and Paris

Airbnb has come under fresh pressure on both sides of the Atlantic, with Toronto winning a major victory against the proliferation of “ghost hotels” and Paris denouncing a “risky” deal between the Olympic committee and the short-term rental company.

After nearly two years of appeals, a tribunal in Ontario has ruled in favour of bylaws passed by Toronto, Canada’s largest city, aimed at reining in short-term rentals.

The new rules force operators to live at the homes they list online, including those posted to Airbnb; limits them to listing three bedrooms at a time; and forces them to register in order to rent out space.

In recent years, Toronto has grappled with housing shortage, with vacancy rates for rental units hovering around 1.1%, below a “healthy” rate of 3%. Much of the frustration for the crisis has been directed at Airbnb. Critics argue it incentivises landlords to remove rental units from the long-term market; research suggests the presence of Airbnb has removed thousands of rental units from the market.

The San Francisco-based company’s spokesman said Toronto’s rules would “unfairly punish” responsible homeowners, but it would work with the city as the bylaws went into effect.

John Tory, the Toronto mayor, said: “This is good news for Toronto residents and a step in the right direction when it comes to regulating short-term rentals and keeping our neighbourhoods liveable.”

The decision could lead to 5,000 long-term rental units returning to the market, according to tribunal adjudicator Scott Tousaw. “Whatever the number, one fact is indisputable: each dedicated [short-term rental] unit displaces one permanent household. That household must find another place to live,” he wrote.

FairBnb Canada, an advocacy group seeking stronger rules, called the ruling “a major victory” for tenants. “Much of the chair’s reasoning reflects our position and confirms that we have been reasonable advocates for fair rules from the very beginning,” it said.

Although the tribunal ruling will ease supply shortages in the coming months, many residents are still struggling to cover the cost of rent. A survey by the Canadian Rental Housing Index found Toronto was “severely unaffordable”, with residents often using more than half of their income to pay rent.

Officials in Paris have also blamed Airbnb for causing a shortage of long-term rental property in the city, pushing up rents and forcing the middle class out.

On Tuesday, the city’s mayor, Anne Hidalgo, expressed her “total determination” to rein in Airbnb and threatened to ban it in certain areas of central Paris.

The French capital is one of Airbnb’s biggest markets with an estimated 60,000 listings, up from just 4,000 in 2012. The company signed a controversial nine-year sponsorship deal with the International Olympic Committee (IOC) on Monday.

Hidalgo, a Socialist who is seeking re-election as mayor next year, has already introduced measures forcing Airbnb owners to limit rentals to 120 nights a year and to register their properties with City Hall, which is taking legal action seeking a €12.5m (£10.7m) fine against the company for failing to remove those who failed to do so.

In a letter sent to the IOC’s head, Thomas Bach, before Monday’s deal, Hidalgo warned that any tie-up would be risky. “By removing a significant number of lodgings from Paris, Airbnb contributes to rising rents and worsens the shortage of apartments on the rental market, at a cost for all Parisians, in particular the middle class,” Hidalgo wrote. She accused Airbnb of “destabilising local businesses and competing harshly with traditional hotels”.

The mayor has threatened to severely curb and even ban short-term tourist rentals in parts of the city if tighter restrictions are not put into place. Last month, the French upper house, the Sénat, approved a measure allowing local authorities in France to reduce the maximum number of rental nights to between 60 and 120, but the move is unlikely to pass the Assemblée Nationale.

Jean-François Martins, the deputy mayor in charge of sports and tourism, said, if Hidalgo was re-elected, City Hall would organise a referendum immediately after next year’s elections so Parisians could decide “the conditions for Airbnb usage” in the city.

“She believes that Airbnb has a nefarious impact on housing. Parisians will have the choice of several options, including the possibility of banning Airbnb in certain areas,” he said.

Joe Gebbia, Airbnb’s co-founder, said the IOC partnership “will ensure that the Games are the most inclusive, accessible and sustainable yet”.

But Ian Brossat, the deputy mayor in charge of housing, said he regretted the IOC’s choice of partner “at a time when many cities in Europe and the world are fighting back against Airbnb”.

On Twitter, he wrote: “[It is] totally irresponsible given the disastrous consequences Airbnb has had on our towns and cities. We are dealing with a company that doesn’t have the means to pay its taxes in France but can find the means to sign a deal with the IOC.”