A key decision of the European Court of Justice ruled in favour of the City of Paris yesterday, which it decreed had acted in accordance with the European legislation when issuing a fine to the owners of two studio apartments on the basis of French law.

The case centred on the use of private homes as short term holiday rentals. In Paris, for example, private individuals are only allowed to rent out their home for 120 days per year. In addition, under the French Construction and Housing Code, a change in use of residential premises in municipalities with more than 200,000 residents, requires prior authorisation.

The case marks a huge victory for cities, which have been finding combating the negative impacts of the platform economy increasingly difficult.

For example, the consequences of illegal housing rentals can include reducing the stock of houses intended for residential use, the increase of nuisances (e.g. noise disturbance) in city districts, and sometimes breaching other areas of public safety such as how many people can stay in one location. With access to the right data, city authorities can start to work with these companies to address these issues.

“Neither the freedom to conduct a business nor the right to property are absolute. Far from it: both can be limited,” read a non-binding opinion last Spring; a marker of what was to come.

The two properties in question had each been ordered to pay a fine if €15,000 and returned to residential use.

In essence, the ruling now confirms that:

• National legislation stipulating that the repeated short-term letting of accommodation to a transient clientele, which does not take up residence there is subject to authorisation, is consistent with EU law
• Combating the long term rental housing shortage constitutes an overriding reason relating to the public interest justifying such legislation

You can have a look at the final decision here

And the press release here