Post-COVID-19 mobilities and the housing crisis in European urban and rural destinations. Policy challenges and research agenda

ABSTRACT

The impacts of the COVID-19 pandemic on working, travel and residential location patterns have attracted much commentary from scholars and practitioners interested in the future of cities and regions. Focusing on Europe, we discuss how pandemic-fuelled remote working and tourism practices have increased the demand for short-term rentals and second homes in rural/coastal areas as well as a number of desirable cities. The pandemic has accelerated pre-existing counter-urbanisation trends, with implications for housing availability and affordability in various parts of Europe. The policy challenges of regulating the use of privately-owned housing are discussed, followed by proposals for future research avenues.

KEYWORDS:

• Mobilities
• second homes
• short-term rentals
• housing crisis
• counter-urbanisation
• planning policy

The impacts of the COVID-19 pandemic on working, travel, and consumption patterns have attracted much commentary from scholars and practitioners interested in the future of cities and regions. In the spring of 2022, two years after the start of the pandemic in Europe, most governmental measures restricting behaviour or mobility were being lifted. Some semblance of ‘normality’ returned, though disrupted by uncertainty about the future trajectory of the pandemic and the multi-faceted implications of the war in Ukraine, notably on energy prices. This is an appropriate moment to discuss the impacts of the pandemic – and its aftermath – on the mobility patterns and residential choices of Europeans, and their implications for housing markets in various locations. In this paper, which draws on examples from North-Western and Southern Europe, we discuss how a combination of pandemic-fuelled remote working and tourism practices have increased the demand for short-term rentals and second homes in different locations – rural and coastal areas on the one hand, and a number of desirable cities on the other. The pandemic has also accelerated pre-existing counter-urbanisation trends, which has implications for housing availability and affordability, and thus socio-spatial inequalities, in various parts of Europe. A brief discussion of arising policy challenges, focused on how the use of privately-owned housing units might be regulated, draws on recent research by the authors. We identify key themes for future research in the conclusion.

Changing working patterns and ‘urban flight’: a short-term trend?

The impacts of the COVID-19 pandemic and associated mobility restrictions have been uneven across territories and social groups (for a European overview, see ESPON, 2020, 2022). The pandemic reflected and magnified existing socio-economic inequalities along the lines of class, race, gender, age, geography, and health, in complex ways, through differential levels of exposure to the virus and of access to good-quality private and public spaces. During the first three waves of the pandemic, most forms of long-distance travel between and within countries came to a near halt. The instruction to ‘work from home’ decreased commuter flows, as those segments of the population that could fulfil their professional duties from home did so. This had a dramatic impact on the footfall in large city centres dominated by office, retail and entertainment uses. News reports were soon highlighting how responses to the pandemic were encouraging the relocation of (some) urban dwellers away from dense, large cities. As lockdown measures were announced, ‘panic mobility’ (Cohen, 2020a) prompted some households to leave cities – temporarily or longer-term – for smaller towns and villages closer to green amenity areas. Such trends are difficult to measure when they involve short-term mobilities without official declaration of a change of residence or other forms of recording. Researchers have creatively used new forms of geo-tagged corporate ‘big data’ to analyse these temporary mobilities. Data from French mobile phone operator Orange showed that a million residents left the Paris city-region around mid-March 2020 as the first lockdown was announced (Licata Caruso, 2020; Orange Hello Future, 2021), many for a short period (see also Benkimoun et al., 2020, based on aggregate Facebook user data). This phenomenon was witnessed all over Europe. Some city dwellers went to their second homes (Gallent, 2020; Pitkänen et al., 2020; Zoğal et al., 2022) or family homes in rural regions, particularly in countries where strong ties to ancestral villages are maintained (e.g. France and Italy). Others rented short- or medium-term accommodation in rural/coastal areas or left with camper vans and tents. This provoked bitter debate on the spread of the coronavirus, and attendant pressures on local healthcare services, caused by ‘selfish’ urbanites.

Other households sold or left their dwellings in big cities with a view to relocating long-term in less dense settlements. Some established new patterns of ‘bi-residence’ (Rey-Lefebvre, 2021) or converted their second home into their primary residence (Zoğal et al., 2020). Such trends were initially documented by journalists in anecdotal ways, but recent academic studies have evidenced short-term net migration losses in core cities and net gains in rural areas (see for example ESCOE, 2021 on London; Vogiazides & Kawalerowicz, 2022 on Stockholm/Sweden; González-Leonardo et al., 2022 on Spain), though as discussed later, these trends do not amount to a mass urban exodus and might not be durable. Longer-term residential mobilities can be analysed through various indicators such as local property tax declarations or changes in the municipal register (in countries where it is compulsory, such as Spain or Germany). Economist Bouba-Olga (2022), using data on school registrations at the start of the 2021/22 year in France, observed a significant increase in the residential mobility of families with young children from larger to smaller cities, though it remains to be seen whether this is a sustained trend. In various countries, such trends were already apparent before the pandemic. In France, for example, Paris had been losing households to the greater city-region and to regional metropolises, smaller towns or rural locations, since the mid-2010s (Vermeersch et al., 2019).

‘Staycations’, ‘digital nomads’ and the ‘half tourist’

As the pandemic spread in the first half of 2020, destinations that were heavily reliant on tourism suffered a brutal drop in visitor flows, with dramatic economic consequences (Gössling et al., 2020). The OECD estimated a decline in international tourism of some 80% by October 2020, though the impacts varied from region to region: in Europe, while destinations that rely heavily on air travel and international tourism were hit hardest, coastal and rural tourism regions with strong domestic markets were less severely affected (Böhme et al., 2021). In 2020, 52% of EU residents aged 15 or over made at least one tourism trip, with overnight stays, in the course of the year – down from 65% in 2019 (Eurostat, 2022). Drawing on data from four major international platforms (Airbnb, Booking, Expedia Group and Tripadvisor), Eurostat showed that in 2019, more than 512 million guest nights spent in the EU were booked via one of the four platforms, or on average 1.4 million guests on a random day. This fell, in 2020, by 47% to 272 million, climbing back to 364 million guest nights in 2021 (Eurostat, 2021). In the summers of 2020 and 2021, when restrictions on national travel were being gradually lifted, the demand for domestic holidays (dubbed ‘staycations’ in English, or ‘tourisme de proximité’ in French) grew, in a context of uncertainty about the evolution of the pandemic and restrictions on international travel (UNWTO, 2020; WTTC, 2020). Regional and national media were quick to point out that further pressures were being piled onto the amenities and housing markets of the same desirable destinations that to which urban dwellers had fled at the start of the pandemic.

In parallel, throughout the pandemic, despite the sharp drop in international tourism and reports of an ‘urban flight’, popular European big cities continued to attract a different kind of temporary visitors. Cities including Lisbon, Barcelona and Prague were magnets to expatriate workers who could afford to temporarily relocate to another country during the pandemic: remote workers in the service, knowledge, creative and cultural industries, and so-called ‘digital nomads’ (an extreme type of remote worker who moves from country to country, working solely online, see Cook, 2018). These lifestyle migrations, ranging in duration from several weeks to several months, were depicted in the media through neologisms such as the rise of the ‘workation’ or the ‘half-tourist’ (Turner, 2020), reflecting the increasingly blurred distinction between short and long-term residential mobility, and between tourism and other practices of place consumption. This is not a new phenomenon, but it became more visible during the pandemic.

Entrepreneurs, investors and businesses – big and small – were quick to capitalise on the associated demand: from small landlords turning homes into short- and medium-term rentals, to digital platforms such as Airbnb turning their attention to these growing markets (Clark & Newcomer, 2020), to new, dedicated medium-term rental platforms such as Flatio and NomadX (Smith & Gillet, 2020) or flourishing co-working space companies. Additionally, many national, regional and local governments have developed public policies to encourage such remote workers, for example specific visa policies (Cook, 2020a) that complement the existing ‘Golden Visa’ or citizenship policies linked with real estate ownership set up by countries like Portugal (Surak, 2022). Marketing campaigns and support packages were launched in the province of Barcelona and in small Italian towns (Marchetti, 2021) to encourage ‘workations’, and in Madeira, ‘digital nomad villages’ were advertised to an international audience.

The socially selective geographies of (post-)COVID-19 mobilities and their impacts on housing markets

A British family renting a holiday cottage via Airbnb in Cornwall for two weeks after a year of hard work as frontline health workers; a young professional couple moving from a small flat in Paris to buy their first home in Burgundy; a Scandinavian graphic designer moving for six months to work remotely from Prague, Lisbon or Madeira; or a wealthy Dutch lawyer buying a second home in Brittany or Porto: these clearly exhibit different income levels and mobility patterns. But the aggregate effects of their leisure and residential mobility patterns have two things in common that matter for the present and future liveability, affordability and inclusive nature of European cities and regions.

First, such mobilities are socially selective and generally the preserve of those with a deeper store of economic and social capital: middle to higher income households and professionals in the service sector, or workers with high educational capital working in the cultural and knowledge industries, with flexible jobs – although some can be precarious and not always highly paid. These voluntary forms of mobility are linked not just with existing property or financial capital, but also with the possibility of working remotely, itself correlated with educational capital (although there are of course exceptions: highly-skilled workers such as doctors cannot work remotely). By contrast, many workers who were ‘on the frontline’ in retail, logistics, manufacturing, healthcare or public service jobs were not able to work from home or shift their place of residence during the pandemic. This has sharpened the division between the privileged and less-privileged ‘mobile’, and privileged and less-privileged ‘immobile’ (Cohen, 2020b).

Second, the unequal purchasing power of these privileged and less-privileged groups, and the consumption practices of the former, have significant impacts on target destinations that are channelled through housing markets. Private market choices are being ‘reshaped by the experience and prospect of living with COVID-19’ (Gallent & Madeddu, 2021, p. 574). The combination of the trends outlined above has, in particular, accentuated two phenomena that existed before the pandemic: the demand for short-term rentals and for second homes. These forms of tourist – or seasonal/short-term – accommodation are often extracted from the housing stock previously available to full-time residents (although this is not always the case in rural/coastal areas, where short-term rentals may also be purpose built or converted from redundant farm buildings (Gallent et al., 2022)). Where the creation of such accommodation involves a transfer from full-time use, this amplifies upward pressures on rental and sale prices, compounds the shortage of homes for full-term workers and residents, and can drive residential displacement – with a clear difference between homeowners (who can use the opportunities of rent extraction in the platform economy to withstand the economic pressure of tourism) and tenants (who are more exposed to the risk of having to leave their homes) (Valente et al., 2022).

In the UK, the sharp increase in short-term rentals and second homes has fuelled a (pre-existing) rural affordability crisis for young and less affluent households in attractive areas such as the Scottish Islands, the coastal parts of Cornwall and Wales, the South-West of England and the national parks (Carrell & McEnaney, 2019; Booth, 2021; Gallent & Madeddu, 2021; Warnes, 2021; Gallent et al., 2022). These locations often enjoy privileged protection from future development via special planning rules (in particular in ‘National Parks’ and ‘Areas of Outstanding Natural Beauty’), thereby conferring greater scarcity value on existing homes. Reports of similar housing pressures in desirable rural and coastal areas have emerged in parts of France (Coulaud & Pellefigue, 2021), Spain (Gutiérrez et al., 2022) and other European countries. These acute housing shortages, alongside the economic displacement of ‘locals’ and the adverse impact of seasonal visitor flows on local services and infrastructure, have accentuated pre-existing tensions and become a topic of public concern, widely commented upon in the European media.

In a different setting – that of desirable cities that have attracted both tourists and remote workers, such as Lisbon and Barcelona – the pressures of tourism and transnational lifestyle migrations coexist and are mutually reinforcing (Cocola-Gant & Lopez-Gay, 2020). This has worsened the housing affordability crisis and gentrification of sought-after neighbourhoods, as homes are converted into short- or medium-term rentals. In the decade before the pandemic, Lisbon had faced a perfect storm of housing market deregulation, foreign investment in real estate, inadequate protections for local tenants, too few affordable homes (Mendes, 2018), and the displacement of long-term residents by short-term rental operators (Cocola-Gant & Gago, 2021). A significant proportion of the short-term rental offer advertised on Airbnb in many European cities comprises units rented year-round, many by ‘multi-listings’ landlords or investors. At the end of 2019, the share of Airbnb listings that were available for more than 60 nights a year ranged from 24% in Berlin to 42% in London, 66% in Prague, 67% in Barcelona, 85% in Lisbon and 88% in Rome (Colomb & Moreira de Souza, 2021, based on data from InsideAirbnb). While the demand for short-term rentals decreased during the first months of the COVID-19 pandemic, in large cities this decline did not lead to a mass return of properties to the long-term market, as was initially anticipated (Temperton, 2020; Cocola-Gant, 2021). A few initiatives have sought to encourage a shift back from short-term to long-term rental, but with limited impact (e.g. the Renda Segura programme in Lisbon; Warren & Almeida, 2020). Rather, the opposite has happened, with operators now seeking to exploit the medium-term rental market (Airdna, 2020) at the expense of full-time residents seeking long-term lets.

Of course, these impacts on housing markets vary significantly from one region to another (Milano & Koens, 2022). For rural locations that have endured demographic decline over several decades, an influx of tourists, remote workers, second homeowners, and return migrants can be perceived as a lifeline, repopulating villages, refurbishing abandoned houses, and circulating new income in local economies (for a discussion of the positive potential of the COVID-19 crisis for rural development, see OECD, 2020b). Recent work by Gallent et al. (2022) in Wales draws attention to the return of young families to small towns and villages that they left several years ago, for reasons of work or education. Their return has been facilitated by flexible working arrangements and may impact positively on local schools and services in the years ahead. Likewise, the profile of part-time residents has also changed, with fewer retired people and more families spending longer periods in rural amenity areas. Elsewhere, some local governments are actively grabbing the lifeline offered by new investment demand. This is happening in some Italian regions (D’Ignoti, 2021), where public policies include schemes enticing people to buy homes for 1 euro in return for a minimum level of investment and length of residence.¹ But in some locations, these trends may be short-lived, insufficient to reverse long-term demographic and economic decline, or can quickly turn into a negative force, squeezing local buyers and renters from the housing market (The Local, 2020).

What next? A mixed and uncertain picture

The evolution of the pandemic remains uncertain, influenced by possible mutations of the virus, the severity of variants and the collective immunity of the population. The medium-term trends in the patterns of leisure, work and residential mobilities outlined above are thus difficult to foresee, as the pandemic may well become endemic. While in the early months of the pandemic a fashionable ‘genre of urbanism punditry’ (Brasuell, 2020) led to much speculation by journalists, researchers, and commentators about the great ‘urban exodus’ or ‘death of the city’ (Hernández-Morales et al., 2020), this has simply not happened. Throughout human history, large-scale pandemics such as the plague and cholera had significant impacts on population trends and on the design and organisation of human settlements (Eltarabily & Elgheznawy, 2020), but they did not ‘kill’ cities (Glaeser, 2022). Powerful forces of agglomeration bring people together in metropolises (Nathan & Overman, 2020; Reades & Crookston, 2021a, 2021b; Southall, 2021). Remote working has costs and benefits for workers and employers (Cook, 2020b). The decisions that employers will make regarding the organisation of work, post-pandemic, are hugely significant (Nathan, 2001), as are workers’ changing preferences based on their experiences of remote or rural working (Gallent, 2022). If the shift to remote working is here to stay in the service sector – for at least part of the working week – this will weaken the relationship between place of work and choice of residential location, and result in new forms of social inequality based on occupation. However, it should be stressed that the major part of the active population remains in occupations that cannot be performed remotely. The proportion of occupations that can be performed remotely in OECD regions (assuming adequate access to an efficient internet connection) is estimated at 30 to 40% (OECD, 2020a), though this potential is unevenly distributed within and across countries. Unsurprisingly, large cities and capital regions offer the highest potential for remote working; rural areas less so (Ibid.). Even in big cities, people able to work from home are a minority (e.g. one in four in London, Reading and Edinburgh; Magrini, 2020). Economic geographers Florida, Rodríguez-Pose and Storper predict that the pandemic is ‘unlikely to significantly alter the winner-take-all economic geography and spatial inequality of the global city system’, but might bring about ‘a series of short-term and some longer-running social changes in the structure and morphology of cities, suburbs, and metropolitan regions’ at the microgeographic scale (Florida et al., 2021, p. 1).

In the UK, after a brief ‘urban flight’, families have been heading back to the cities, particularly London. This is due to three main factors (Gallent, 2022): the partial return of old working patterns; a rebalancing of utility and exchange considerations in housing choices; and shortcomings in the lifestyles and digital infrastructure found in the countryside (see also Farmer & Zanetti, 2021). In France, a recent report (POPSU, 2022) has shown that the pandemic has reinforced pre-existing peri-urbanisation trends, and encouraged a rural renaissance in some regions, an increased attractiveness for tourist hotspots, and patterns of bi- or multiple residence. These trends are seen as positive for towns with fewer than 100,000 inhabitants, whose political leaders have been trying to woo new residents (Peltier, 2020; Warnant, 2020), but they tend to be directed to localities that are well-connected to larger metropolitan areas (Chermann, 2021). In Spain, where rural depopulation threatens 5,600 villages with extinction, the growth in remote working has fuelled hopes for the revival of the ‘España vaciada’ (empty Spain), with the launch of new initiatives to attract ‘remote workers’ to small towns and villages.² But the results are so far limited, and there is no end in sight for the mass depopulation of large parts of the country. What has been witnessed are net outflows from large cities such as Madrid and Barcelona to well-connected smaller localities in the surrounding provinces (Jorrín, 2022). Altogether, in most European countries there is no massive outflow of urban populations to the ‘countryside’. Demand for inner-city housing grew during 2021 in many large European cities (Martínez, 2021). And housing demand shifts have often been more visible within large city-regions rather than outside them (Nathan, 2021; Cheshire et al., 2021; Ahrend et al., 2022).

When it comes to tourism flows, the signs are pointing to a return to ‘business as usual’. In 2019, tourism in Europe involved 3 million firms, employed 22.6 million people (11% of total EU employment) and accounted for 9.5% of EU GDP (Böhme et al., 2021). For European countries, regions and cities that are most reliant on tourism, the economic impacts of the lockdowns during the early months of the pandemic were dramatic. At the same time, in destinations that had suffered from the negative consequences of mass tourism prior to the pandemic, local residents often welcomed the respite and revelled in the peace and quiet of their ‘empty’ towns and cities. For activists, scholars, local residents and policy-makers, who had started to challenge the impacts of ‘over-tourism’ (Novy & Colomb, 2020), the pandemic was an opportunity to rethink existing models (e.g. Cañada & Murray, 2021). Intense debates have been taking place between those who want to see radically different forms of future tourism, and ‘advocates of […] rapid recovery [who] stand opposed to wider efforts to reform tourism to be more ethical, responsible and sustainable’ (Higgins-Desbiolles, 2021, p. 551).

The increased appetite for domestic holidays due to pandemic fears, an increased reluctance to fly, and reduced disposable incomes at times of acute inflation, could all have positive consequences for the reduction of C02 emissions, and lead to more dissipated tourist flows, supporting the economic development of hitherto less-visited regions. Writing in the summer of 2022, it is clear, however, that high levels of international mobility and huge pressures on popular European destinations have returned, reigniting social conflicts. While some local governments have tried to develop new initiatives to mitigate ‘over-tourism’ (UNWTO, 2018; Peeters et al., 2018), e.g. through attempts at luring tourists to off-the-beaten track areas, others have resorted to dramatic, headline-grabbing measures that restrict access to beauty spots through daily caps and online permits (Elton, 2022), as in the Calanques of Marseille or Venice (Associated Press, 2022).

Two years after the start of the pandemic, it thus seems that this major episode of disruption might not have the game-changing qualities on the patterns of residential choice and leisure mobilities of populations in Europe (and more broadly the ‘Global North’) that were trumpeted by commentators in its early months. Those patterns are more likely to be disrupted by the consequences of the war in Ukraine, growing geopolitical tensions among the globe’s superpowers, rising inflation and energy prices, and the fast-approaching end of ‘peak oil’.

Policy implications: the challenges of regulating temporary housing use in market economies

Altogether, the changing mobility patterns encouraged by the pandemic and its aftermath are multi-faceted, and outcomes on the ground have been heterogeneous. Such patterns have compounded pre-existing trends, generating opportunities for some cities and regions, but significant challenges for others. In attractive cities, coastal towns and rural villages, recent experiences have reignited pre-pandemic concerns about the negative impacts of ‘touristification’ on neighbourhoods and lower-income households (Colomb & Novy, 2019). In liberal market economies where the free movement of citizens (within the EU) and private property rights are considered sacrosanct, there are no easy means of regulating the use, especially temporary use, of private housing in desirable locations. Regulatory and tax responses have varied significantly from one country to another. Our research has shown that regulating short-term rentals and second homes is politically controversial and practically challenging. Different levels of governments (across and within national borders) display a variety of attitudes, some favouring strict regulation and others a laissez-faire approach.

The sharp increase in short-term rentals facilitated by digital platforms such as Airbnb or Homeaway had, prior to the pandemic, become increasingly contested in many places. In recent years, many European city governments have consequently developed new short-term rental regulations accompanied by stricter controls on the ground. Responses have ranged from relative laissez-faire (Prague, Milan, Rome) to strict quantitative control (Berlin, Madrid, Barcelona, Amsterdam), with most city governments seeking to find a middle-ground approach that differentiates between the professional rental of whole units and the occasional rental of one’s primary residence (Paris, London) (Aguilera et al., 2021; Colomb & Moreira de Souza, 2021). These regulations rely on various combinations of registration and/or licensing, quality standards, time and space limits, zoning and/or quantitative restrictions, and taxation.

However, our study of such regulations in 12 European cities (Ibid.) shows that public authorities everywhere face huge difficulties in implementing and enforcing regulations. One of the main challenges is that the digital platforms that mediate the short-term rental offer have, in general, refused to share detailed, individualised listings of advertised properties, making it difficult for public authorities to identify the operator and exact location of short-term rentals and therefore monitor compliance with local rules. Platforms have used the EU General Data Protection and E-Commerce Directives to justify their refusal to share data or monitor the content of published listings. Actors opposed to regulation have additionally invoked the EU Services Directive to legally challenge some of the stringent regulatory measures taken by city governments, arguing that the latter constitute barriers to ‘market access’ (Colomb & Moreira de Souza, 2021). In response, a European alliance of more than 20 city mayors has publicly called for a revised EU legislative framework that would require stronger cooperation from platforms through compulsory data sharing, publication of registration numbers and the removal of illegal listings (Eurocities, 2020). The European Commission (2021) ran a public consultation on new proposals for a possible EU initiative on short-term rentals, whose outcomes will be known at the end of 2022.

When it comes to second homes, taxation and land use planning are the main policy fields that influence the extent (and possibly geographies) of this form of property and housing use (for a detailed discussion, see Gallent et al., 2005, 2022; Hall, 2015; Hall & Müller, 2018; Gallent & Hamiduddin, 2021; Garton Grimwood et al., 2022). Whilst second homes are found across Europe and many societies display a deep cultural attachment to mountain chalets, lakeside cabins, family (hobby) farms or purpose-built seaside homes, the UK – and especially England – is a particularly salient example of central government actually encouraging the purchase of second homes through the tax treatment of private housing. Although the ‘capital gain’ on the value appreciation of second homes is taxed when a property is sold, the rate of tax is lower than income tax on work and a range of reliefs are available (including a tax-free allowance that reduces the capital gain liability). Annual property tax liability, in the form of council tax, is also low and because rates were last reviewed in 1991, they do not reflect the increased value of homes situated in rural amenity areas. Supplemental local taxes on second homes have been in use for some time in other European countries, for example in Italy and France, where the local tax on land/property owned (imposta municipale unica/taxe d’habitation) is higher for homes not permanently lived in. Government in England has proposed giving authorities the discretion to levy a 100% supplement on second homes, in order to ‘cost’ their impact, but it has arguably been slow to introduce this measure. The discretion to charge a supplement was introduced in Wales in 2014, and from 2023, local authorities will be able to apply a 300% supplement on properties that are empty or ‘no-one’s main residence’. But a combination of relatively low borrowing rates (and hence savings rates) and rising inflation across the UK mean that housing will remain an attractive asset class for households to invest in, and a hedge against inflation, unless there is a fundamental shift in the market, predicated on as-yet-unpredicted economic catastrophe.

Another aspect of local taxation has contributed to blur the line between second homes and short-term rentals in England. Second homes used exclusively by friends and family of the owner are liable to domestic (i.e. residential) council tax, while ‘self-catering holiday accommodation’ that is mainly rented to paying guests is liable for non-domestic business rates. Because council tax is usually higher than business rates (on ‘holiday lets’), there is an incentive to register second homes as the latter to reduce the tax liability. During the pandemic, this has meant that a number of second homes were listed by their owners as ‘self-catering holiday accommodation’, and thus became, in administrative terms, small businesses: in England, this made them eligible for the emergency support grants that were set up to support struggling small businesses. In essence, wealthy households were given ‘free money’ that they did not need, a controversial situation that has been heavily reported in the media.

In Wales and Scotland, recent legislation has given more power, in theory, to local governments to stop further second home and short-let ‘extractions’ from the general housing market. The Scottish parliament passed a new law to allow local authorities to establish short-term let ‘control areas’ and to require them to establish a short-term lets licensing scheme. The Welsh government has also announced that it will soon instigate mandatory licensing for holiday lets, and will hand local planning authorities the power to prevent ‘change of use’ from a full-time residence to a holiday let where it can be shown that high number of these short-term rentals are having an adverse effect on local communities (Welsh Government, 2022). Minimum advertised and actual let periods for self-catering holiday accommodation were lengthened at the beginning of 2022. This tightened definition of holiday lets is likely to stop second homes from being re-registered, as properties that are not actually let for minimum periods must remain ‘second homes’ and pay council tax, including the locally-set supplement. Because not all short-term rentals are ‘officially’ registered as self-catering holiday accommodation (some are just second homes, or indeed first homes, that are occasionally let), a broader array of measures to restrict ‘change of use’ through the planning system have been debated to address pressures caused by the combination of ‘second homes’ and ‘holiday lets’. It was proposed in 2021 that planning permission to turn full-time residences into holiday let or second homes should be required where such transfers were shown to have a negative impact (Brooks, 2021; Welsh Government, 2021). That proposal is now due to become a reality before the end of 2022 (Welsh Government, 2022). Whilst there are challenges around this approach – and uncertainties as to whether planning authorities have the resources to evidence impacts and enforce rules, and whether local application will drive displacement effects – this experiment is likely to be highly informative and closely watched in the years ahead.

England may follow the example set by the Welsh and Scottish governments, but it has been slower to address the issue. This is partly because of the strong alignment in the devolved nations between the second home and holiday let debate and nationalist leanings, which has resulted in a sustained focus on property rights and the challenges facing rural communities for several decades. In England, many lawmakers are themselves second homeowners or have significant property interests. Property use rights have been considered inalienable and Conservative politicians have called moves to restrict second home ownership and use ‘spiteful’. In recent years, some local authorities have used local planning rules to prevent newly built homes from being used seasonally as holiday lets and second homes. This is achieved by attaching a ‘full time occupancy’ condition to planning permissions for new development. But because buyers seeking second homes often prefer older property, restrictions on occupancy of newly-built homes has limited effect: hence the imminent introduction of ‘change of use’ powers in Wales – an idea that government in England has traditionally rejected.

Similar demands for more regulation of the transformation of real estate into second homes are being heard in other European countries. In France, 3.2 million homes are registered as second homes (10% of the total housing stock, INSEE, 2021). In some villages of the coast of Brittany, 80% of the stock are second homes, which has led to controversial proposals by local politicians calling for a minimum length of local residence as a criterion for the purchase of real estate (Boquen, 2021). In Switzerland, a citizen-driven referendum led to a new law limiting the number of second homes per municipality to 20%, which came into force in 2016. There is an urgent need for further local investigations that aim to understand to what extent such regulations are enforceable on the ground, and the impact they are having on housing markets, local economies, and communities.

Conclusion: a research agenda

Across Europe, while some city, regional and national governments have taken advantage of the COVID-19-generated crisis to enact and enforce stricter regulations on short-term rentals and second homes, others have pushed for a liberalising agenda to attract income-generating visitors or temporary residents. But the ‘right to mobility’ of tourists, remote workers and higher income households who can move between places has to be balanced with the right to housing of those who wish to live in a locale more permanently. Local and regional governments need to find a middle ground between maintaining their cities’ attractiveness to visitors and temporary users, while tackling housing inequalities, protecting long-term residential uses and quality of life. This depends on the competences and policy instruments at their disposal, particularly in the fields of planning and housing, and on the extent to which national and EU legal frameworks (the latter no longer applying to the UK) allow them to regulate in the name of public interest objectives. The incentives and disincentives provided by taxation are also crucial.

The pandemic has magnified and complicated an important research field, with more work now needed on urban-rural dynamics, housing market change, community impacts, and regulatory response across Europe. There are potentially three important areas for further research (regionally-focused and comparative). First, as the evolution of the pandemic unfolds, compounded by other significant macro-trends such as growing geopolitical tensions, rising inflation and energy prices, and increased visibility of the effects of climate change, the sociological makeup and territorial impacts of changing patterns of leisure, work and residential mobilities require in-depth study. How is the organisation of work changing, and in which sectors are remote working practices prevalent? Who can, and cannot, work remotely? Are there new forms of occupational and social inequalities arising from remote working trends? How does the digital divide between individuals and territories influence such trends? What are the spatial impacts of such trends in terms of commuting patterns and residential mobility choices in different areas – large cities and amenity locations in coastal, inland rural, and mountain regions? Are new forms of bi- or multi-residence becoming more common? Is there evidence of some positive impacts for rural development and repopulation in hitherto declining areas? Are those trends encouraging more patterns of ‘digital nomadism’ within and across national borders, and if so, who is participating in such forms of mobilities, where and for how long? And how do public policies influence such mobilities (e.g. visa or tax incentives)? Mapping the geographies of temporary mobilities or multiple residences is not easy. How can new forms of geo-tagged big data produced by public and private organisations (e.g. network industries, social media and real estate platforms, see Chambreuil et al., 2022; POPSU, 2022) be used by researchers to gain a better understanding of those trends?

Second, more detailed studies of the housing market impacts of the above trends are needed – both local and comparative, to avoid generalising assumptions. How do these trends feed into the demand for second homes and short-term rentals? Available evidence is starting to show that impacts have been heterogeneous, and that pandemic effects are complicated by local circumstances and pre-existing processes and pressures. How can we evaluate the share of the long-term housing stock that is transferred to such uses? How can we measure the impacts on affordability, acknowledging it is not easy to isolate the effect of second homes and short-term rentals from other possible variables that may influence rents and sale prices (for a discussion, see inter alia Wachsmuth, 2017; Sheppard & Udell, 2018)? What kind of ownership and investment patterns (beyond individual households) emerge with regard to these new real estate ‘asset classes’? In other words, what kinds of strategies of local entrepreneurship or globalised corporate investment into the short-term rental market have developed? What is the role of digital platforms in mediating and shaping the supply and demand of short-term rentals?

Third, in-depth and comparative analyses of the national and local policy responses that have been developed to control second homes and short-term rentals are needed. What is the respective role of land use planning and housing regulations on the one hand, taxation and other economic (dis)incentives on the other? Some of the interventions are so new that it will take several years before their effectiveness, and their wider impacts on local housing markets (within and beyond the areas of application) can be properly understood. How do the national and EU contexts frame the capacity of regional and local authorities to regulate the use of private housing and associated real estate investment? Are there complementarities or tensions between the agendas of different tiers of government? What social and political-economic struggles emerge around regulatory attempts, i.e. which interest groups mobilise for or against regulation, how and with what weight? What challenges emerge in terms of implementation and enforcement, and how do local authorities cope with these, particularly through the use of surveillance technologies and social control (Harris, 2013, 2015)? Finally, what kind of broader policies are developed to address the adverse effects of visitor flows in desirable locations and promote more balanced coexistence between temporary/occasional and more permanent users?

Local investigations will play a crucial role in shining a light on this triad of concerns: on the heterogeneous and context-specific nature of drivers, on the varied impacts of second homes and short-term rentals on housing markets, and on the complexities of formulating effective policy responses. There is currently huge pressure on (local) governments across Europe – and beyond, in North America and Australia – to design regulations that are up to the significant task of managing the externalities arising from visitor pressure and housing market change. Some headline-grabbing policies are being formulated that offer seemingly bold answers to very complex questions, some of which challenging established property rights in order to rebalance collective and private interests. Whilst these are broadly welcomed, it is important that evidence is not relegated behind political calculation, and that the complete rationale for, and impacts of, regulation are carefully evaluated.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. https://1eurohouses.com.

2. For example: https://pueblosacogedores.com/.