2. Short Term Rentals

A. From an air mattress to myriads of tiny hotels

The idea of short term rentals (STR) originated in 2007 in San Francisco, when two roommates decided to rent out an air mattress in their living room to guests and offer them a simple breakfast (hence the Airbnb acronym: AirBed & Breakfast).

Their idea quickly evolved into Airbnb as we know it today: a company which, thanks to its digital platform, has now become a global giant, along with a number of other platforms also involved in short-term rentals such as Homeaway or Booking.

At the end of 2021, according to Airbnb’s releases, property listings on the platform reached six million, in 100,000 cities around the world, with over four million hosts and more than one billion guest arrivals.

Nowadays, short-term property rentals are essentially an organised touristic activity (and not a makeshift property rental) that is being developed within the framework of modern “platform capitalism”, and not in the context of a “sharing economy”, as is often reflected in the dominant public discourse and the relevant legislative intervention.

The traits that the short-term rentals’ activity has acquired today, result in a number of negative consequences in the housing sector, the most significant of which are the incremental pressure they exert on rental prices, the displacement of residents from their neighbourhoods and the “touristification“ of mainly the cities’ centres.

The negative effects of the spreading of the short-term rentals practice are mainly affecting areas of increased touristic interest, where Airbnb properties are multiplying at an explosive rate.

In Greece’s case, the greatest pressures are felt in the central and more touristic areas of major cities (and especially Athens and Thessaloniki), but also in other touristic destinations in the country, particularly on the islands, where the available housing stock is rather restricted.

B. Rent increases, residents’ displacement and touristification

Short-term property rentals have spread at an impressive rate worldwide. Notably, in Greece, Airbnb properties in 2010 started at just 132 but still managed to exceed 125,000 just before the pandemic broke out.

If we observe the situation across the Greek regions, we can see that most properties are clustered in the Attica Region, while more than half of the properties are situated in the Central part of Athens, and more particularly in the Municipality of Athens. Additionally, large concentrations are found in some other regions of the country. Particularly striking was a recent finding by Grant Thornton that Chania is in first place nationwide in terms of the percentage of short-term rentals out of the total number of properties available for rent, reaching 95%.

A central feature of the short-term property rental phenomenon is its geographically uneven growth. In the Municipality of Athens, the largest concentrations are found in the most central, easily accessible and highly touristic areas, mainly around the Acropolis and Lycabettus Hill. These are areas of the city that are populated mainly by middle to high income residents, while in zones that are more working class and more distant from the centre, Airbnb property concentrations are smaller.

Gradually, the short-term rental activity detaches itself almost completely from the principles of “sharing economy”, as the vast majority of the properties (87%) are rented out as whole apartments, without the owners living in them, and not as living spaces that the host actually shares with the guest.

As a result of the proliferation of short-term rentals, a significant proportion of the available housing stock is being withdrawn from the conventional long-term rental market, resulting in a reduction in the supply of available properties for rent, while the demand remains stable or increases. Thus, there are significant upward pressures on rental and property prices, especially in the central areas of Athens, without implying that the expansion of short-term rentals is the only cause for the renting cost increase.

These pressures are also reinforced by the intensification of renovation works, which are often undertaken by owners of short-term rental properties, which in turn are pushing up the prices of the available stock as a whole. As rents and property prices are rising alarmingly, especially in the Athens city centre, it is estimated that a significant number of tenants are being displaced from their neighbourhoods. Those who cannot afford the increased rental costs look for cheaper accommodation and move to more remote areas.

At the same time, in order to better accommodate the city’s visitors and tourists, several central areas are being violently transformed, for example with the opening of a multitude of eateries and recreational businesses at the expense of other land uses, a transformation that other areas of Athens have already experienced during the past decades (typical examples are Plaka and Psirri). There is thus a risk that a number of districts will be transformed into single-use “theme areas” that are mainly attractive for tourists, and therefore a risk of losing the mixed use and activities’ character that is normally typical of the urban area of the city centre. Such developments don’t just happen in Athens but are rather a common international experience. The term for it in international literature is “touristification” and “tourism gentrification”.

It is also worth mentioning that the growth of short-term rentals has negative effects not only on matters regarding housing and urban space, but also on the labour sector, since employment in the short-term rental sector tends to be “unofficial” to a large extent, with precarious and sketchy employment relationships, in line with the “flexibility” doctrine (Balampanidis, Papatzani, Pettas, 2021).

When the pandemic broke out and global tourism came to a standstill, property bookings initially dropped but then gradually began to recover. Short-term rentals proved to be resilient, flexible and attractive, as they were able to respond, more so than the traditional tourist accommodation options (hotels, resorts etc), to the new demand that visitors expressed for “safe” tourist destinations and accommodation. In its financial report for the third quarter of 2021, Airbnb stated that it recorded the highest revenues in its history. More specifically, its net revenue for its most profitable third quarter to date – that of 2021 – was $834 million, 280% higher than its revenues in the third quarter of 2020, and 213% higher than that of the third quarter of 2019.

Meanwhile, the market for short-term rentals is expanding to include so-called “medium-term leases“. This new type of rental is linked, among other things, to modern digitalisation, the subsequent spread of teleworking and the infamous “digital nomads“, who can work using their laptops from anywhere in the world, and each time rent a place to stay temporarily in their chosen location.

C. Short-term rentals as an asymmetrical phenomenon

The explosive development of short-term rentals in Greece is due to a number of reasons. Initially they developed within the context of the multi-layered crisis, a facet of which was the housing crisis. Insecurity, unemployment and the “burden” of home ownership coincided with an increased demand for tourist accommodation. Tourism in Greece has seen a huge surge since 2013, following the international trends of “overtourism”, the shift towards a search for “authentic experiences” and the suggestion that tourists could “live like a local” in the areas that they visit, which has become a slogan for short-term rental companies.

Moreover, Athens’ touristic identity is changing from a stopover to and from traditional touristic destinations mainly during the summer, to a year-round “city break” destination. The campaign of the Greek National Tourism Organisation entitled “Visit Greece, a 365 day destination”, which attempts to extend the tourist season throughout the year, has contributed to this, while the plans for tourism for the period up to 2030 are based on similar objectives.

Especially during the early stages of their development, short-term rentals were an opportunity for many individual owners to earn an additional income. However, the location of an Airbnb property is a key determinant of the income it can generate. In the most central areas of the Municipality of Athens that have good public transport and are close to tourist attractions, the average short-term rental price exceeds €80 per night, while in the most remote areas, they do not surpass €40. So while for some people short-term rentals provide a modest but essential supplementary income, for others they can be a new and lucrative source of wealth.

In recent years, fewer owners accumulate more and more short-term rental properties. The number of hosts listing more than two properties on the platform is constantly increasing, reaching 62.5%. At the same time, an ever increasing number of management companies enter the short-term rental market, handling tens or even hundreds of properties. Such an example is Mint, which manages 350 properties.

This increase highlights short-term property rentals as a new and promising field for real estate speculation. It is worth noting that the increase in the number of companies operating in the short-term rental market led to the creation of the Short-Term Accommodation Managers Association (STAMA Greece) in 2021 with the objective of defending their interests.

The increase in the number of companies involved, also reflects the growing “professionalisation” of the short-term rental activity as well as the growing competition that is putting considerable pressure on the market’s small “players”, while at the same time gradually displacing them.

These developments are also affecting the traditional tourism sector. On the one hand, competition between traditional forms of tourist accommodation and short-term rentals is increasing, a fact which often emerges in the public debate, particularly from the point of view of traditional tourism providers, who present certain comparative figures in order to draw attention to unfair competition. On the other hand, there seems to be a simultaneous boost of the traditional sector, with Athens emerging as a “hotel magnet”.

It is worth noting another factor that has played an important role in the rapid and unhindered development of short-term rentals. Previous gentrification efforts in Athens encountered obstacles in the form of the fragmented and socially differentiated (horizontal) ownership model at the level of Athenian apartment buildings. However, short-term rentals seem to be able to overcome such obstacles, on the one hand, due to the exploitation of even the least privileged apartments located on the lower floors of apartment buildings and, on the other hand, due to the emergent concentration of properties in the hands of fewer owners, with the risk of overturning the social diffusion of property (Balampanidis, Papatzani, Pettas, 2021).

Some institutional developments that are linked to the general broader effort to attract foreign investment in Greece and the involvement of new players in the real estate market, also contribute to the negative impact that short-term rentals have on the rental housing crisis. There is a recent institutional framework aiming to attract “digital nomads” that follows a similar logic, inviting this type of employees (foreign professionals who work remotely, with a fixed income of at least €3,500 per month) to Greece – a move that increases the demand for the afore-mentioned new type of “medium-term leases”, especially in the Athens city centre.

D. In need of an institutional regulation of short-term rentals

The international experience of regulating the effects of short-term leases comprises some very elaborate measures. In most countries in Europe and the USA, it is usually local governments that are in charge of making regulatory interventions, as the impact of the phenomenon is directly linked to the specific conditions in each municipality or neighbourhood.

Regulatory and/or restrictive measures vary and often include: taxing STRs, limiting the total annual allowable duration of a property rental via Airbnb (San Francisco and Amsterdam), requiring that owners live at the property at the same time as tenants during Airbnb rentals (New York and Berlin), limiting the number of Airbnb rentals allowed per neighbourhood (Berlin and Barcelona), and other spatially defined restrictions (Toronto, Palma de Mallorca, Paris, Barcelona), etc. (Balampanidis, Papatzani, Pettas, 2019).

The existing institutional framework in Greece does not really address the serious and alarming effects of Airbnb. The relevant Law 4472/2017 (Articles 83 and 84) is limited to horizontal tax collection measures, basically requiring Airbnb properties to be declared to the appropriate authorities in order to be taxed. In addition, Greece (like many other countries) continues to consider Airbnb leases as an activity that’s part of the “sharing economy” rather than a product of “platform economy”, and continues to treat short-term rentals as “urban real estate leases” rather than tourist accommodation rentals. At an institutional level, therefore, there is a need for an appropriate and precise definition of Airbnb activity, from which the relevant regulations as well as moderate to stricter restrictions that will be spatially defined and socially equitable, can be derived.

Already the Association of Greek Tourism Enterprises (SETE), the Hellenic Chamber of Hotels and several Local Authorities in various regions of the country have expressed strong concerns regarding both the resulting competition and the phenomenon of overtourism in general, as well as proposals for dealing with the overloading/exceeding of the capacity of tourist destinations.

At the same time, there is a need to introduce relevant safeguards in the event of institutional developments that indirectly exacerbate the scale and negative effects of Airbnb, such as those related to investments and the financialisation of housing.

At a European Union level, the debate on Airbnb regulation remains open, with the company consistently arguing against regulating the Airbnb market. The results of a recent public consultation on the institutional response to the negative effects of Airbnb are mainly awaited, as well as possible actions to limit or even abolish golden visas.