Prague City Hall wants Parliament to allow stricter regulation of Airbnb

Raymond Johnston

Written by Raymond Johnston
Published on 11.06.2020 10:30 (updated on 11.06.2020)

Prague City Hall plans to ask Czech Parliament to change the law so that cities can better regulate short-term rental services such as Airbnb.

City Councilor Hana Kordová Marvanová (United Force for Prague) has been authorized to prepare a proposal to amend the country’s Trade Licensing Act.

Under the amendment to the Trade Licensing Act that Prague intends to submit to the Parliament, municipalities would be able to create regulations concerning short-term accommodation services in apartment buildings, family houses or family recreational buildings.

The draft amendment would give municipalities legal possibilities to limit short-term accommodation by setting conditions under which it will be possible to provide such a service, especially in apartment buildings, namely the maximum number of persons accommodated at the same time or the maximum number of overnight stays in one calendar year.

The emergency situation due to the coronavirus epidemic has led to a significant reduction in short-term accommodation services. Prague wants to use this situation to change the conditions so that the provision of short-term accommodation services via platforms such as Airbnb does not return to its original state, which was unbearable in terms of life in the city center, according to a City Hall press release.

“The essence of the proposal is to empower municipalities to issue regulations concerning the scope of short-term accommodation in apartments. As demonstrated in the run-up to the coronavirus epidemic, the issue of short-term accommodation regulation needs to be addressed, especially in large cities, as its provision through Airbnb-type platforms has long gone beyond the shared economy,” Councilor Kordová Marvanová said.

“Therefore, it is necessary to adjust the legislative framework so that Czech cities keep pace with those world capitals that have this authority. I hope that the proposal will gain support in Parliament, as it did in April, when the lower house adopted the first of our proposals to allow trade licensing authorities to obtain information on rented flats from digital platforms, so that they can better enforce legal obligations. All our proposals are aimed at ensuring that the use of a shared economy in the area of short-term accommodation becomes reasonable and does not bother those who live permanently in the center,” Kordová Marvanová added.

Short-term accommodation arranged through internet platforms has become a lucrative business, with apartments and whole buildings basically serving as hotels, but without meeting all legal requirement or being approved as accommodation facilities. The advantage for these businesses is that the situation is difficult to monitor and is legally not completely clear. This type of business is largely carried out in the gray economy, according to City Hall.

The current state of shared accommodation has reduced the availability of housing to citizens, and caused inconvenience as well as security risks to permanent residents. The loss of fees and taxes has impacted municipal and state coffers. The situation has also caused unequal conditions and unfair competition with the hotel industry.

“The current legislation is not sufficient to define the legal framework for the regulation of shared accommodation as regards the enforceability of the conditions for the provision of short-term accommodation services. The demand for housing far exceeds the supply. and the properties offered to satisfy housing needs are offered at prices significantly exceeding the current market rent and, even more significantly, for short-term accommodation. This situation is unsustainable due to the housing policy,” Kordová Marvanová said.

She added that the long-term situation in the city center, with thousands of flats not serving their intended residential purpose, needs to be resolved at the state level. “The inspiration for the submission of the draft authorization was also the legal regulations on a number of world cities, which usually have greater legislative powers than those available to Prague,” she added.

Other cities already limit the number of days a flat can be used for short-term rental. Amsterdam limits it to 30 days, while London has a limit of 90 days, Paris 120 days, and Berlin 182 days. Cities also can set higher penalties than Prague for non-compliance. In Vienna, for example, it is up to 50,000 euros.

“By using the proposed authorization, municipalities including Prague would get a tool to protect their residents from excessive noise and other problems. Similarly, limiting the maximum number of overnight stays gives an advantage to long-term rent over short-term accommodation, which could contribute to resolving the housing shortage and developing long-term rentals,” Kordová Marvanová said.

She added that the current situation with coronavirus has led to thousands of apartments becoming available for rent in Prague’s city center due to the lack of demand for short-term accommodation services.

According to the available data, a total of 11,485 accommodation spaces were offered for rent in Prague in 2018 through Airbnb, of which 80% were entire flats, or family houses. Supply and demand were clearly concentrated in the city center, with Old Town offering 1,337 units, Vinohrady offering 1,205, and Žižkov 1,153.