Paris housing officials have welcomed a European Court of Justice ruling backing a French law that requires local authorisation for short-term property rentals.
The decision is a setback for two rental companies in the French capital.
It was also being watched by other European cities facing a shortage of housing for longer-term rent.
Short-stay specialist Airbnb said it welcomed a decision that "will go to help in clarifying the rules".
Pointing out that it was not party to the case, Airbnb added that the ruling related to second homes and not people's primary residences, so would, it said, have little or no impact in Paris.
The European Court ruling comes days after representatives from 22 cities across the continent called on European Union officials to come up with rules to protect local housing markets from short-term holiday rentals.
What the Paris case is about
In May 2017, two tourism rental companies in Paris, Cali Apartments SCI and HX, were fined €15,000 (£13,600; $17,400) for renting out two studio flats (via the Airbnb platform) without authorisation from Paris authorities.
They were also told to restore the flats to residential use, citing a housing code that requires permission for any change of use in cities of over 200,000 residents and three areas of Paris.
The firms appealed against the ruling and the case was referred to the European Court in Luxembourg.
But the ECJ backed the French ruling, finding that:
- the aim of the French law was to combat "the long-term rental housing shortage" and "constitutes an overriding reason relating to the public interest"
- the national legislation concerned is proportionate to the objective pursued.
How the two sides reacted
The top Paris official in charge of housing, Ian Brossat, declared the ruling a "fine victory". Mayor Anne Hidalgo said the ruling had backed French law on rules for Airbnb rentals.
"This victory, awaited by many cities, marks a turning point for the supervision of seasonal rentals and constitutes a step forward for the right to housing for all," the mayor said on Twitter.
In a statement, Airbnb made clear it saw the ruling as limited to "hosts who share secondary homes in Paris", emphasising that most people who put their properties on the platform in the French capital shared their main residence.
"We look forward to working closely with local authorities on proportionate regulation that puts local families and communities first and works for all," it added.
Why other cities are looking at the case
Last Thursday, Paris and 21 other cities including Barcelona, Florence, Amsterdam and Berlin called on EU competition commissioner Margrethe Vestager to push forward an EU-wide rule framework for short-term rentals, rather than the existing system in which cities impose their own rules.
In December 2019, an attempt by France's hotel industry to force Airbnb to be seen as a property rental firm was rejected by the ECJ, which said instead that the internet giant was an "information society service".