Thursday, July 6, 2017

Russian Gangsters and Airbnb Are Pricing the Locals Out of Residential Real Estate in Barcelona

Following on yesterday's "Russian Mobsters Arrested for Peddling Stolen Chocolate".
From Wolf Street, June 26:

Airbnb Just Made Itself Even More Unpopular in Barcelona  
Organized criminals from Russia are subletting apartments to tourists, as locals struggle with soaring rents.
Relations between the ultimate disruptor of global tourism, Airbnb, and Barcelona City Council just took another turn for the worse following news that organized criminals from Russia are making massive profits by subletting apartments in Barcelona to tourists through the online site.

For the San Francisco-based company, any further damage to its Barcelona market could be very costly. With over 23,000 registered dwellings, the city is far and away the most important Spanish destination for the platform’s users and the sixth biggest in the world, behind Paris (1), London (2), New York (3), Rio (4) and Los Angeles (5), five cities that are significantly larger than Barcelona.
Last year the council slapped the company with a €30,000 fine for advertising lodgings that did not have permits to host tourists. The fine was later annulled by court order on the grounds that “sharing economy” regulation is currently in a legal vacuum. That hasn’t stopped the Council from imposing a 20-fold hike in the maximum fine that can be levied on home rental sites, to €600,000.

In September 2016 it sent out a blanket letter to local residents warning them that any apartment rented to visitors must be logged in the province’s Tourism Registry and have a permit. Otherwise, owners could face fines of up to €30,000. The letter also urged residents to snitch on any neighbors who they believe are running illegal tourist accommodation operations in their buildings. Given the volume of noise and scale of disruption tourist apartments tend to produce, many locals are more than happy to oblige....
...It’s easy to see the appeal of such a scheme: Montse was renting her apartment to Timur for a modest €950 a month, who in turn rented it out for €200 a night. If he and the Russian gang he fronts for rented it out every night (not an impossible task in a city like Barcelona, where it apparently takes just three hours to book out a half-decent flat for the entire month of July), he would have made roughly €6,000 in revenues on a monthly outlay of less than €1,000 — tax free, of course!...