The Shift
Leilani Farha, Global Director
Marta Ribera Carbó, European Program Director
The global housing crises, housing financialization, increase in short-term rentals, and touristification cannot be understood as isolated events.
The financialization of housing has transformed residential real estate into an asset for generating wealth, eroding the social function of housing and threatening the human right to adequate housing[1]. In addition, the rise of short-term rentals, fueled by the proliferation of housing rental platforms, has further compromised the realization of this right.
Short-term rental platforms have contributed to the financialization of housing. These platforms originated as a form of the collaborative economy, but what originally began as a means for individual households to derive a small income periodically from their own property has today become an industry unto itself.
Those investors —such as private equity firms, hedge funds, and real estate investment trusts— either purchase significant numbers of residential units directly and convert them into short-term rentals, or invest in short-term rental platforms[2].
Investment in short-term rental platforms has become hugely profitable, and institutional investors are investing in this area. Landlords are increasingly incentivized to rent properties on a short-term basis due to the higher returns compared to residential long-term rentals. Communities across cities are facing significant displacement, with entire neighborhoods becoming unrecognizable as locals are priced out. And this is happening not only in Western Europe or in North-America. The data and analysis gathered by the Global Observatory of Short-Term Rentals (OGAT for its acronyms in Spanish and Portuguese) show how this is growing throughout Latin America as well.
Temporary rental platforms have led to a conversion of long-term rental properties into temporary vacation rentals, reducing the availability of affordable residential housing for local residents and driving housing prices up[3]. For instance, it is estimated that in Canada that approximately 31,000 accommodations were converted into short term rentals[4], and in Barcelona, the share of temporary rentals over the total increased from 13% to 40% between 2019 and 2024[5].
This intersects with the human right to housing, as adequate housing is a fundamental human right which is universally agreed on. It is enshrined in the Universal Declaration of Human Rights and reiterated in various international agreements, including the Sustainable Development Goals.
This right encompasses more than just the provision of shelter; it requires that housing be secure, affordable, habitable, and accessible, enabling residents to live in peace, dignity, and security. Therefore, short term rentals impact the right to housing in four different ways:
- Undermine affordability. In areas where concentration of short term rental grows, rents and housing prices increase, making it unaffordable for many local residents.
- Reduce housing availability and deprive access. The transformation of long-term rental properties into short-term accommodations reduces the supply of long-term residential housing.
- Contribute to cultural disruptions of housing and erosion of community. Touristification, the process by which cities or neighborhoods are reshaped to cater to tourists at the expense of local residents[6], is intricately linked to the rise of short-term rentals.
- Overarching impact. Financialization of housing is a modern form of colonialism and colonization. It is the seizing of land and property by the already wealthy institutional investors and multinational corporations, who then use the property to extract wealth, while pushing the poorest people out of their communities. It is not benign, and it is ruining our cities and people’s lives.
Governments bear the obligation to ensure the realization of the right to housing, which includes regulating short-term rental platforms and minimizing the ability of institutional investors to distort housing markets towards unaffordability. To avoid conversion from residential to short-term rentals and further financialization, rent caps should be regulated for temporary and seasonal rent as well.
It is essential that municipalities are empowered to adopt and enforce legislation regarding short-term rentals. Many municipalities lack the jurisdictional and resource capacity to regulate these rentals effectively, and in many cases, local governments face litigation from platforms when attempting to implement regulations[7].
Cities worldwide have begun to see the value of local control of short-term rentals, with examples of regulatory measures in different cities. In 2023, New York began implementing regulations requiring that properties be rented for periods of 30 days or longer, or that the property owner be present during shorter stays. These measures have shown promise, as studies indicate that registration requirements can lead to substantial decreases in the number of active short-term rentals and a corresponding decline in housing prices[8]. Barcelona announced the intention to eliminate all short-term rental licenses by 2029, and Athens paused the registration of new short-term rentals for one year. Without adequate regulation, short-term rental platforms will continue to exacerbate housing crises in cities worldwide, eroding the accessibility of affordable housing and intensifying inequality.
Different initiatives look forward to addressing this crisis. Among them, the OGAT has been established to help respond to these issues, particularly in Global South cities, where data on the subject is scarce and awareness on the topic is lower. OGAT aims to contribute to a better understanding of temporary rentals worldwide through the production and systematization of information; it aims to strengthen housing rights movements through collaboration among activists, academics and human rights organizations; and it promotes the adoption of public policies to safeguard the right to housing, making short-term rentals a strategic focus.
Ultimately, governments must embrace human rights-based housing policies that prioritize the needs of local residents over profit-driven demands. Implementing regulations that limit short-term rentals, ensuring transparency, and fostering affordable housing development are essential steps toward protecting the right to housing for all. The momentum seen in cities implementing successful restrictions on short-term rentals offers a hopeful path forward for ensuring housing stability and community cohesion.
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Notes
[1] For further details on the financialization of housing, see The Shift Directives
[2] Global companies like Blueground proudly display how they have increased short-term rental management from 100 apartments in 2015 to 5,000 in 2021. According to Inside Airbnb, Blueground is the company with the most short-term listings in cities like Paris, Lisbon, Vienna and Berlin.
According to MarketBeat: Airbnb – ABNB Institutional Ownership, 80.76% of Airbnb stock is owned by institutional investors. The most heavily invested institutionals were Vanguard Group Inc. ($5.66B), FMR LLC ($2.92B), Jennison Associates LLC ($1.75B), Capital Research Global Investors ($1.71B), Edgewood Management LLC ($1.69B), Polen Capital Management LLC ($1.52B), and Price T Rowe Associates Inc. MD ($958.28M)
[3] Garcia-López, M.-À., Jofre-Monseny, J., Martínez-Mazza, R., & Segú, M. (2020). Do short-term rental platforms affect housing markets? evidence from airbnb in Barcelona. Journal of Urban Economics, 119, 103278. https://doi.org/10.1016/j.jue.2020.103278
Horn, K., & Merante, M. (2017). Is home sharing driving up rents? evidence from airbnb in Boston. Journal of Housing Economics, 38, 14–24. https://doi.org/10.1016/j.jhe.2017.08.002
Shabrina, Z., Arcaute, E., & Batty, M. (2021). Airbnb and its potential impact on the London housing market. Urban Studies, 59(1), 197–221. https://doi.org/10.1177/0042098020970865
[4] Wachsmuth, D. & Team (2020) The Impact of Short-term Rentals on Canadian Housing Project, McGill University
[5] Observatori Metropolità de l’Habitatge. (2024, June). L’oferta de Lloguer de Temporada a Catalunya
[6] The Shift (2022), The Shift Directives
[7] For instance, the city of Toronto limited short-term rentals in 2018 by imposing registration requirements, municipal taxes, and restricting the number of days properties can be rented for short-term use. After the regulations were approved, a group of landlords filed appeals with the Local Planning Appeal Tribunal. In 2019, the tribunal ruled in favor of the city, dismissing arguments against the regulations.
[8] Bei, G., & Celata, F. (2023). Challenges and effects of short-term rentals regulation. Annals of Tourism Research, 101, 103605. https://doi.org/10.1016/j.annals.2023.103605
Wachsmuth, D. (2024), Short-term rental regulations in British Columbia. A report prepared by researchers from the Urban Politics and Governance research group, School of Urban Planning, McGill University,