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A Modern-Day Robinhood Bites the Hand that Feeds Him

French Property Insider
Volume XVI, Issue 16
Thursday, April 19, 2018 • Paris, France

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Bonjour French Property Insider Subscriber,

Paris Update, Paris Suing Airbnb

Not only are we tired of talking about it, but we're tired of dealing with it. It's akin to turning on CNN and the only news you hear is about Donald Trump. In Paris, if it's not news about the transportation strikes, then it's about the ongoing campaign against short-term rentals.

The latest news is about the city suing Airbnb for not removing unregistered Paris listings from its site. I wrote about it for Paris-Update.com this week in an article titled "Paris Files Suit against Airbnb." Read it here

This all started in November of 2009. One of the rental agents in the Paris community, who wanted to boost her long-term rentals, put out a bulletin to every email address she could muster up (unsolicited) warning that the city of Paris was "cracking down on short-term rentals." The news spread like wildfire, particularly among the rental industry professionals. Days after, about 40 of the city's agencies met to decide what to do with this news.

During the meeting, the agencies decided to start a federation to investigate and combat the regulations. I then consulted with notaires and lawyers, who didn't know a thing about the regulations. No one did...except perhaps this agency director who had exposed the regulations. The mayor of the city at the time, Bertrand Delanoë, had not informed anyone that the laws existed or that he was enforcing them -- laws that had been on the books since 1948. My guess was that he resurrected the ancient laws in an attempt to show his constituents that he was doing something constructive about the housing shortage, but had no intention of making any major effort to enforce them, knowing the adverse effect it would have.

This particular agent may have seen it as a way of boosting her long-term rental business, by exposing the regulations against short-term rentals. Instead, it fired-on all of her competitors but backfired on her, as well. Not much happened immediately after her broadcasting the news, but when the New York Times picked up the story the following summer, all hell broke loose: "To Address Its Housing Shortage, Paris Cracks Down on Pied-à-Terre Rentals." 

Airbnb in Paris, France

Paris Deputy Mayor Ian Brossat

As a result of the NY Times article, it was no longer a secret from the public. Residents unhappy with suitcases in their stairwells or loud voices from renters, or just having strangers in their buildings, began to denounce their neighbors for their short-term rentals. City Hall could no longer ignore the regulations. They had no choice but to answer the residents' pleas. Mayor Delanoë still didn't do more than follow-up on the denouncements and the rental industry continued to grow and prosper...treading lightly.

When Madame Anne Hidalgo took office in 2014, she made it a high priority to fix the housing shortage in Paris. Along with that promise came a very robust campaign against offenders of the out-dated regulations. She appointed Communist Party Ian Brossat as deputy mayor of Paris in charge of housing. In an interview by Humanite.fr in October of 2013, Brossat, then a mere 33 years old, was proud to have housing in the hands of a Communist. He vowed to reduce the cost of housing in the city, to mix the socio-economic levels of the neighborhoods and to create 10,000 homes per year accessible to lower-income residents by creating more social housing. He took vacant apartment housing and converted them to lower-income residences. He was quoted as saying "The ghettos of the rich are gone. We intend to make social housing everywhere, including in the 16th arrondissement."

As one can imagine, this gets a mixed response depending on whether you're the lucky one living in social housing in the city's most expensive districts or the property owner of an apartment in a well-healed area whose property is losing value thanks to the equalization of the so-called playing field.

With a man like M. Brossat at the helm of the short-term rental issues, there is no global viewpoint. Clearly, he has no regard for those that "feed," and only for those who need "to be fed," without regard for how they will be fed if he bites the hand that feeds them. I use these metaphors as a way of illustrating why no one-sided system can benefit anyone.

Brossat sees himself as the city's Robinhood, stealing from the rich to give to the poor, but it's not so simple as that and doesn't work so well in real life in the City of Light. While he's trying to benefit one segment of the city, he's harming another and the one who really ends up paying the price is the very segment he's working hard to benefit. Let me explain this.

The property owners who are seeking revenues from their investments are 90% French residents; about 10% constitute foreign buyers. They are the very people who have worked hard, earned and saved money in order to purchase their homes or invest in property for their future. If they don't have the right to the rewards of their efforts, then someone else will step in to fill the void of tourist accommodations. That "someone" is the big guy: the companies (mostly from outside of France) who can afford to buy-up whole buildings and convert them to "apart hotels" -- just more of the hotel industry. This is exactly what's happening in the city now, and that means that big business benefits while French citizens are being punished.

I contend that Brossat's and the city's goal to find more permanent housing for its residents is honorable, but the methods they are using have been reprehensible. A team of about 25 people is focused on ferreting out the offenders. They stalk tourists, knock on doors in buildings uninvited holding an ID that allows them entry even if the owner isn't there. They are armed with cameras, ask questions of the occupants, encourage denouncements via a city website and other behavior reminiscent of the occupation during World War II -- when citizens were encouraged to denounce their Jewish neighbors.

The latest attempt, to register all legal apartments (only those which are occupied by primary residents) and now to make the various Internet platforms culpable, tightens the noose on property owners. This action will not encourage property ownership in the City of Light and will have an adverse affect to what he's trying to achieve. He won't make tenants happy if he can't make the landlords happy -- there must be a balance. Brossat has been quoted as saying, "Je ne veux pas que Paris devienne une ville musée" ("I do not want Paris to become a museum city"), but that's exactly what he's going to get if property ownership by individuals is replaced by corporations.

The city can't stop the need for owners to find tenants and tenants' needs to find properties. There is a huge demand for apartment rentals in the third most visited city in the world and that will not go away...unless they get fed up and stop visiting Paris! Hardly likely. Meanwhile, owners will have no choice, but to find underground methods of solving their rental problems, so expect to see a growing black market and expect to pay more rent as properties become a premium, while the quality goes down.

Unfortunately, the Communist in charge doesn't understand supply-and-demand economics -- the real world we live in. And until this administration is replaced by someone with a more global eye on the issue, we will be suffering and seeking solutions.

A bientôt,

Adrian Leeds - Paris, France

Adrian Leeds
Adrian Leeds Group

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