The Judgment of the European Court of Justice of 22 September 2020 C-724/18 and Its Impact on the Real Estate Market in the EU

Abstract

In 2020 two significant events affected the property market. The first one was the pandemic of COVID-19, which brought unprecedented uncertainty and resulted in a dramatic drop in property prices on rental market and hampered growth of the sales market. Another significant event this article is going to examine was the judgment C-724/18 of the European Court of Justice issued on 22 September 2020. The ECJ ruled that the authorisation scheme for short-term rental does not constitute a breach of the freedom of services warranted by the EU. The judgment concerns the legitimacy of the constraints imposed by local authorities on entrepreneurs operating short-term rentals. It also establishes the applicability of the EU’s Services Directive (2006/123/EC) to short-term rental. The ECJ holds in the judgment that the measure requiring an authorisation for short-term rental aimed tackling shortage of long-term rental housing represents an overriding reason of public interest and as such it is justified. The article analyses the consequences of the ECJ judgment for the market of short-term rentals, in view of the existing legal regulations and in respect of its possible consequences for short-term rental in the EU member states.