Berlin had some of the world’s most restrictive rules for Airbnb rentals. Now it’s loosening up.



For cities looking to adopt a hard line on Airbnb and other short-term home rentals, Germany’s capital has been a model of resolve.

In 2016, Berlin implemented some of the world’s strictest laws for vacation rentals. With few exceptions, the city made short-term rentals on platforms such as Airbnb and Wimdu illegal, with fines of up to 100,000 euros (about $123,000) for hosts who violate the law.

But two years later, Berlin is loosening restrictions on home sharers — a shift Airbnb is celebrating and other urban tourism destinations may be watching with concern. As Berlin has learned, cracking down on private home rentals is a massive task, and the courts aren’t necessarily on your side.

“Cities have to let go of the dream that they have control over these platforms, because that’s not the world we live in anymore,” said Arun Sundararajan, a business professor at New York University.

Berlin has claimed some success since it banned most short-term home rentals. Its 2016 law prohibits home sharing except for people wanting to rent out extra rooms or who received one of a small number of government permits. Officials report that, by the end of 2017, they had returned about 4,000 apartments to the long-term rental market and collected about $3.2 million in fines. 

But despite the city’s intentions, the short-term rental market has continued to expand.

Airbnb’s Berlin bookings in 2016, when the ban took effect, were up 68 percent compared with 2015, according to Jeroen Oskam, director of research at the Hotelschool in The Hague. 

That’s slower growth than in London (130 percent) and Amsterdam (125 percent), so Berlin’s law may have prevented an even greater explosion.

“You can’t prove that the slower growth was due to the law,” Oskam said, “but it may have scared off new entrants to the market.”

Still, Berlin remains Germany’s Airbnb capital — more flats and rooms are offered here than in Hamburg, Munich and Frankfurt combined. There are more than 20,576 Berlin listings on Airbnb, and about half of those are entire homes, according to the data-scraping site Insideairbnb.com.

“There are people who earn a lot of money with short-term rentals, and they won’t be deterred so quickly,” said Reiner Braun, a researcher at Empirica, a Berlin-based institute that studies the housing market.

‘No public interest’

The large number of rentals, and the fact that Airbnb and other home-sharing platforms traditionally do not publish addresses, makes enforcing the law difficult.

Eckhard Sagitza, 63, is director of housing for Friedrichshain-Kreuzberg, one of Berlin’s most popular districts for tourists. He and his team of six inspectors have various tricks for weeding out illicit Airbnbs within their jurisdiction of 146,514 apartments. But they’re highly reliant on tipsters who call in reports of suitcases knocking their way down the hall, combination locks on the front door and road-weary strangers coming and going at odd hours.

“Usually, it’s a report by a neighbor that tips us off,” Sagitza said. 

He complained that the major home-sharing platforms denied the city’s requests to share host data, citing privacy laws and erecting bureaucratic hurdles. 

This month, a Berlin court ruled at least partially in Airbnb’s favor, stating that the German branch of the company is not required to share data about anonymous listings. City officials will be required to contact the parent company in Dublin to acquire further information.

Airbnb asserts that its Dublin team cooperates with city officials and law enforcement agencies across Europe. “Where we see the right kinds of processes, the right steps being taken by cities, by police forces, tax agencies, that data is available to people,” said Patrick Robinson, Airbnb’s director of public policy for Europe, the Middle East and Africa.

But while the company is generally willing to share aggregate data, it maintains that it will not provide personal data unless there’s a “valid legal basis and in accordance with national and European rules.”

Previous court rulings also came down in Airbnb’s favor, determining that a Berlin landlord should be allowed to offer his entire apartment for short-term rentals for up to 182 days a year and that hosts wanting to rent their second homes should be granted permits to do so.

“The administrative courts basically said, for home sharers who rent out their rooms in the short term, there’s no public interest in keeping these rooms empty,” said Christian Eckart, an attorney who has represented dozens of clients seeking to get permits from the city.

Berlin officials, citing a housing shortage and rising rent prices, had argued that apartments are a public resource. “We wanted to ensure the city has affordable living space for residents,” said Iris Spranger, a member of the city’s legislature who advocated for the original law and its latest revisions.

But Braun, the housing researcher, is skeptical that banning Airbnbs could have much effect on housing availability or rent levels. “It’s is a drop in the bucket,” he said. “To solve the housing shortage, Berlin would have to build 25,000 new apartments every year. But the city is only building about half of that, and they’ve been falling short for 15 years.” 

New York University’s Sundararajan, who has studied sharing industries around the globe, said that an increase in Airbnb options may actually benefit cities by driving business to neighborhoods that don’t usually experience tourism and helping hosts afford living costs.

“Maybe it’s different in the long run if everybody is an Airbnb host,” he said. “But I’ve seen no credible evidence so far that Airbnb has an impact on affordability on long-term housing.” He cited other factors that contribute to increased rent, such as a rise in population, limited housing stock and higher incomes brought about by new industries such as tech.

New options

Last week, after mounting pressure to rethink its approach, Berlin’s city legislature voted to make key revisions to the law. Landlords will be able to apply for permits to rent a primary residence for unlimited periods and second homes for up to 90 days a year. The revised law also increases the fee for violations to a maximum of $616,000 and requires permit holders to indicate a registration number on their rental listings.

Berlin hopes that with the revisions, set to take effect May 1, it can allow home sharers to rent out their apartments while stopping commercial interests from taking over. 

“People from all over the world are buying up flats in Berlin and renting them out as vacation rentals,” said Katrin Schmidberger, a member of the city legislature who helped draft the new revisions. “We want to protect Berlin’s living space for long-term residents.”

Airbnb welcomed the change.

“We want to continue our good dialogue with the city of Berlin and promote a permit procedure that is unbureaucratic and citizen-friendly,” Alexander Schwarz, Airbnb’s general manager for Germany, said in a statement.

But holding violators accountable probably will remain a challenge, according to housing director Sagitza. He said that he doubts the revisions will close loopholes that allow businesses to operate illegally.

Many other cities have tried to regulate sharing economies such as vacation rentals. Paris and Amsterdam instituted 120-day and 30-day limits on hosts, respectively. Barcelona requires landlords wanting to rent out their flats to obtain a city permit or risk a fine of about $74,000.

“No city has been successful in enforcing the law,” Oskam said. The big problem is lack of transparency, the Hotelschool director of research said. For example, Amsterdam has a tourist-tax agreement with Airbnb but no way to prove host compliance other than by relying on data provided by the company. “So we say it’s basically a donation to the city,” he said.

Sundararajan said that rather than struggling to gain more control, cities should delegate responsibilities. He offered a London example: Last year, Airbnb helped the city enforce its 90-day cap on hosts by making it impossible to rent out an entire home for more days.

“There is a new social contract we are getting into with digital platforms,” Sundararajan said. He suggested that governments need to start forming alliances that are in the public interest — and start getting comfortable with private companies taking on regulatory responsibilities.

“Of course, there’s always a risk that they abuse this privilege,” Sundararajan said. “But honestly, I don’t see an alternative.”



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