The government of Robert Golob has adopted a law that directly interferes with the constitutionally guaranteed right to free economic initiative. The new hospitality law will effectively wipe out 90 percent of private providers of short-term accommodation, according to the representatives of the landlord association. On the other hand, as studies from abroad show, it will not achieve the stated objective of lowering rents.
On Thursday, the government adopted a new law on the hospitality sector, which restricts landlords from renting out their own premises on a short-term basis for tourism purposes. Many market their apartments on online platforms to tourists visiting Slovenia. The government believes that this business model is to blame for the increase in long-term rental prices. The government’s draft law therefore introduces a whole series of restrictions that will effectively destroy the entire private short-term accommodation market, and thus those who make a living from working in the industry.
The Association of Landlords was very clear at Thursday’s press conference. The government’s law will “wipe out” 90 percent of short-term accommodation, as the restrictions imposed by the law, if adopted, will not cause most landlords to opt for long-term renting.
Many landlords have expressed grave concerns about the government’s proposal, the Slovenian Press Agency (Slovenska tiskovna agencija – STA) reports. Marko Petković, chairman of the board of the “Slovenian Hospitality Homes,” described the bill as a “minefield of unviable and unworkable provisions”.
Slovenia, the only European country with such restrictions
Private short-stay accommodation providers account for 25 percent of all accommodations in the country. “This represents about 50,000 citizens, that is to say, people related to the landlords and their families,” Petković said, adding that the restrictions drawn up by the government are “unique” in Europe. Referring to the series of restrictions, he said, “How does the ministry imagine that the landlords, who will be forced to go into long-term renting, how will they rent out their properties, and which family with children will rent an apartment for 305 days, only to then have to move out for 60 days afterwards.”
Tadej Cotič from the Association of Landlords also commented on the limitation to a maximum of 60 days of renting per year: “With this, we are pushing the whole industry into a big paradox, because, in fact, then it will not be able to take bookings, because it will only be able to open in July to take bookings for August.”
The representatives of the landlords have announced the possibility of a petition for a review of the constitutionality of the law, as well as the possibility of damages actions. They have calculated that the law will generate 1.6 billion euros in business damage over 30 years.
Government intentions will not bear fruit
The objectives of the law were presented at Thursday’s press conference by State Secretary at the Ministry of the Economy, Matevž Frangež. The government side claims that they want to restore the original intention of the apartments, which are currently being rented out for tourism purposes. “We are introducing the regulation to ensure the affordability of housing for young Slovenian families, to return apartments that were built for the purpose of being a home to their original purpose,” Frangež said.
As we have already written many times in the past, experience from abroad shows that such restrictions do not bear fruit. For example, similar restrictions have been implemented in the USA. In New York, they have also drastically limited the amount of short-term rentals, but this has had no effect on the rental market. Rents have remained high, and the only noticeable effect of the restrictions has been a sharp, 70-percent drop in short-term overnight stays, which, of course, has negative economic effects, reports Wired.
Betsey Stevenson, a professor of public policy and economics at the University of Michigan, explained to Bloomberg that even in the USA, shutting down AirBnB won’t solve the housing crisis. “Banning Airbnb may sound good to local residents who see it as opening up more housing for them. But by that logic, why not ban home offices or even commercial real estate?” wondered Stevenson.
The government proposal is good for ‘capitalists’ but bad for small entrepreneurs
One of the consequences of the restrictions on short-term rentals in Slovenia will certainly be more pressure on hoteliers, who already do not offer enough accommodation to meet the demand. The result will be higher occupancy rates, higher profits for already large concentrations of capital, and financial ruin for smaller tourism providers. The government proposal is also tearing down the ‘democratisation’ of the hotel business.
The leader of the opposition and president of the Slovenian Democratic Party (Slovenska demokratska stranka – SDS), Janez Janša, does not support the government’s proposal. “After the elections, we will abolish the absurd restrictions on renting out properties through the Airbnb platform,” he wrote on X.
Ž. K.
