Just a few days ago, the Spanish government fined property rentals giant Airbnb €64m for advertising unlicensed apartments. In this month’s blog, our CEO David Ireland looks at short-term rentals like Airbnb, their impact on the housing crisis, resident backlash and cities’ responses to their growth. While Airbnb-style platforms clearly affect housing availability in some markets, over emphasising their impact risks overlooking deeper structural issues driving housing scarcity, from financing and supply constraints to decades of underinvestment in affordable homes.
It was one of the most memorable images of 2024: A group of Barcelona residents spraying tourists in outdoor cafes with toy water pistols, shouting “tourists go home.” It captured the anger felt in many cities, towards tourism gone-too-far.
Over the past decade, cities around the world have faced two coinciding challenges: a dramatic increase in tourism, and a relentless rise in housing costs. Platforms like Airbnb have made it easier than ever for travellers to rent homes as an alternative to hotel rooms. That same ease has made it simpler for landlords to remove properties from the residential market, to supply the short-term holiday rental market. The cumulative impact is a measurable loss of residential housing and potentially an increase in housing costs.
In response, many city governments have implemented strict regulations or outright bans on short-term rentals, citing overtourism and its impact on housing affordability. From Barcelona to New York, there is a growing consensus that unregulated short-term rentals are contributing to the housing crisis, and they need to be constrained.
Over-tourism and housing
It is unlikely that anyone intended for it to turn out this way. In 2008, two school friends in San Francisco came up with the simple idea of putting an air mattress in their living room and renting it out as a cheap bed and breakfast. Originally called “Airbedandbreakfast,” the name was soon shortened to Airbnb, and over the next 17 years it grew into a global platform with more than 5 million properties listed worldwide.
What began as a way to rent out spare rooms, gradually shifted towards the commercial letting of entire apartments and homes. With its rapid growth and disruptive business model, Airbnb soon challenged the existing hotel industry and before long it started to be blamed for overtourism and for exacerbating the housing crisis.
There are grounds for criticism. The connection between Airbnb-style rentals and housing stress is well documented, with numerous studies showing that their growth has reduced housing supply and driven up rents. A 2024 study found that the presence of Airbnb-style rentals raised annual rents in Berlin by 1.3 to 2.7%. An earlier study in Portugal showed an average 3.7% increase in house prices in its major cities, but in historic centres of Lisbon and Porto, where short-term rentals are heavily concentrated, the effect was far more profound, pushing up prices by more than 30%.
These studies also show a clear correlation between the rise in Airbnb-style rentals and a decline in residential housing. However, it’s not a one-to-one swap. In New York which hosts the largest number of Airbnb listings globally, roughly 50,000 Airbnb-style rental properties have appeared. Yet this has translated into a net loss of only 10,000 residential homes.
Why the discrepancy? Some Airbnb-style rentals were converted from commercial units or subdivided from existing apartments. Others were previously holiday homes, often vacant for most of the year.
Still, the effect on housing availability is real, and as Barcelona’s water pistol protest demonstrated, felt deeply by residents. Cities are taking action, to limit the impact and control the growth of Airbnb-style rentals.
UK cities act first
In 2015, London was the first major city to bring in a rule that limits entire-home rentals on Airbnb-style platforms to no more than 90 days per year. If an owner wants to let the home for longer, they have to apply for formal planning permission. Councils are thus able to regulate the number of Airbnb-style rentals in their area.
Edinburgh, another city heavily impacted by seasonal tourism, introduced a tourist tax in 2024 on all overnight stays, including Airbnb-style rentals. Projected to raise £50 million annually by 2029, the tax is intended to support public services strained by mass tourism. In 2025, the city also began a major enforcement campaign against unlicensed short-term lets.
Portugal follows suit
Portugal’s major cities Lisbon, Porto, and Faro began restricting Airbnb-style rentals in 2021 by banning new licenses in designated “housing pressure zones.” Initially controversial, these measures were later strengthened. In 2022, the government introduced mandatory registration, stricter safety rules on short-term rentals, and tax incentives for landlords to switch back to residential letting. Alongside this, vital investment in social housing was increased to encourage a growth in affordable housing.
New York gets tough
In the USA, New York City has introduced some of the world’s most stringent regulations on Airbnb-style rentals. Local Law 18, which came into effect in 2023, requires hosts to register, live in the property during guest stays, and host no more than two guests at a time. These restrictions have effectively eliminated new commercial Airbnb operations in the city and are designed to preserve the residential housing stock.
Barcelona’s radical move
As one of the world’s most visited cities, Barcelona has become a case study in overtourism’s consequences. In June 2024, the city announced a bold policy that will ban all short-term rentals by 2028. The goal is to return over 10,000 homes to the long-term rental market.
Barcelona already enforces some of Europe’s strictest rules. Airbnb-style rentals are capped at 30 nights per year, and hosts must register with the city for a short-term license. In several neighbourhoods, short term rentals are banned entirely. The new rules mean that the city will not issue any new licenses and will not renew existing ones so that by 2028 all of the licenses will have expired.
Are Airbnb bans the solution?
The methods used for controlling Airbnb-style rentals vary by city, but the overall aims are consistent. They acknowledge that when a significant share of housing is repurposed for tourism, local renters lose out. Restrictions that have been introduced in cities like London and Lisbon are attempts to rebalance the market by capping the amount of Airbnb-style rentals that can operate, with the expectation that the policy will return properties to the housing market. The strict rules in New York and Barcelona aim to shrink or even close the market for Airbnb-style rentals altogether.
This will undoubtably restrict the options, and probably increase the costs for visitors. But we should recognise the advantages of traditional hotels. Hotels are regulated, taxed, and planned for within city infrastructure meaning they can host visitors without displacing long-term residents or reshaping neighbourhoods.
It’s also important to note that Airbnb-style rentals are far from the sole cause of rising housing costs and the housing crisis. National financial policies that affect the cost of borrowing money for housing, changes in population and demographics, and the lack of funding for new affordable housing play a far greater role. In many large cities, Airbnb style rentals make up only a small fraction of the total housing stock, so their overall impact is likely modest and banning them here would do little to address the need for more affordable long term housing.
The bigger balancing act
Airbnb has captured the zeitgeist and, in many cities, become a convenient scapegoat for out-of-control housing markets. Yet the criticism is not without merit. Evidence shows that the rapid rise of Airbnb-style rentals has reduced available housing stock, driven up rents, and transformed once-stable neighbourhoods into transient tourist zones. In many tourist-heavy districts, long-standing communities have all but disappeared, a shift that the water pistol-armed residents of Barcelona and other similarly affected cities can see and feel.
Like many disruptive technologies, Airbnb flourished in a regulatory vacuum. For over a decade, it operated largely unchecked, benefiting from outdated laws that had not anticipated this new rental model. That era is now ending. In response to mounting public pressure and growing evidence of harm, cities around the world are beginning to regulate Airbnb-style rentals more tightly. Just this month (December 2025) the Spanish government imposed a €64 million fine on Airbnb for breaches of the country’s consumer laws, including over 65,000 unlicenced listings.
But while regulation is necessary, it is far from sufficient. Airbnb-style platforms are only one part of a much wider housing challenge. The housing crisis and soaring costs are also driven by deeper, systemic issues, from economic policy and land use decisions, to demographic shifts and chronic underinvestment in affordable housing. Even the most stringent restrictions on short-term lets will only partially ease the strain. Lasting, meaningful change will require cities and governments to pursue comprehensive housing strategies that go well beyond managing the effects of tourism.
