Airbnb & France: Recent decisions of the French Supreme Court put a sharp brake on Parisian short-term rental activity
By Anne Epinat, Partner In Extenso Avocats and Christopher Boinet, Lawyer at the Paris Bar and Partner at In Extenso Avocats
On behalf of owners, Airbnb rents out furnished apartments to short stay, non-resident transient visitors.
These rents are subject to the regulation of the City of Paris and this regulation has long stated that the activity of short-term furnished rentals to transient visitors, in return for payment, may not be carried out in premises used for residential purposes, pursuant to the French Construction and Housing Code. This same regulation requires owners to request prior permission for a change of use, pursuant to Articles L.631-7 and L.631-7-1 of the French Construction and Housing Code.
The City of Paris grants this permission in exchange for a "compensation", the purpose of which is to:
- change to residential use a space identical (or larger, in disadvantaged areas) to that used for short-term furnished rentals, or
- pay a cost for this change of use of a residential space, in the strict sense, into a tourist accommodation space.
Consequently, any owner who rents out premises intended for residential use on a short-term furnished rental basis to a transient visitor without prior change of use permission is liable to a fine that can be very costly and inhibitive.
On 18 February 2021, the French Supreme Court, the "Cour de Cassation" has firmly reiterated three times the above principles.
Prior to this, the French Supreme Court had emphasised that the European Court of Justice considered Articles L.631-7 and L.631-7-1 of the French Construction and Housing Code to be in compliance with Community Directive 2006/123/EC of 12 December 2006.
The Cour de Cassation has declared that from now on, the Paris Court of appeal will have to adjudicate on sanctions.
In the absence of a conviction by the Courts for the moment, it is therefore not possible to rule on the amount of fines and their punitive nature with regard to offending owners.
Who will now dare assume the sure-fire financial risk? Owners or Airbnb?
Will other French cities follow Paris's lead?
Will this sound the death knell for Airbnb in France?
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