A pivotal moment for the European Short-Term Rental (STR) sector has arrived via the Court of Justice of the European Union (CJEU). In a move that could force major cities across the continent to rewrite their housing rulebooks, the Advocate General (AG) has issued a stinging Opinion in Case C-813/24, involving the platform Smartflats and the Brussels-Capital Region.
The Opinion establishes a critical legal precedent: Urban planning authorization regimes cannot be used as a shield to bypass the strict requirements of the EU Services Directive.
For years, municipalities have used complex zoning and planning laws to restrict the STR market. The Advocate General has now clarified that if these planning laws restrict market access, they must undergo the rigorous “proportionality test” mandated by EU law.
The Core Conflict: Urban Planning vs. Market Access
The central tension in Smartflats was whether the Brussels regional legislation—which requires explicit urban planning authorization to change a property’s use from residential to tourist accommodation—fell under the scope of the EU Services Directive.
Regional authorities often argue that urban planning is a local competence, distinct from service regulation. However, the Advocate General disagreed. The Opinion states that because these authorization schemes directly affect the ability of a service provider (the host or platform) to access the market, they must comply with the Directive.
This triggers a cascade of legal obligations for cities. It is no longer enough to cite “housing shortages” as a blanket justification for restrictions; the process of regulation itself is now under the microscope.
The 5 Pillars of Compliant Regulation
According to the Opinion, any Member State or city introducing authorization schemes for STRs must arguably demonstrate that their measures meet five specific criteria. If a regulation fails even one, it may be deemed incompatible with EU law.
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Proven Necessity: The restriction must be justified by an overriding reason of public interest (e.g., combatting a genuine housing shortage or protecting the urban environment). It cannot be purely economic protectionism for hotels.
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Proportionality: The measure must be suitable for achieving the objective and must not go beyond what is necessary. If a less restrictive measure (like a nightcap rather than a ban) could work, the ban is illegal.
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Transparency: The rules must be clear, unambiguous, and public in advance.
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Legal Certainty: Hosts must be able to predict the outcome of their applications. The rules cannot be changed arbitrarily.
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Procedural Fairness: The application process must be objective and impartial.
The Critique of the Brussels Regime: A Warning to Other Cities
The Advocate General did not just outline abstract principles; he applied them to the Brussels STR regime, flagging major procedural flaws that are common in many other European cities.
The Opinion highlights that the Brussels system suffers from “broad municipal discretion” and “unclear criteria.” When a city council can reject a license based on vague feelings about “neighborhood character” without objective metrics, it undermines legal certainty.
Furthermore, the AG pointed out that a compliant system must have:
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Binding deadlines for authorities to make a decision.
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A duty to give reasons for any rejection.
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Effective remedies (a clear path to appeal a rejection).
The “Administrative Silence” Bombshell
Perhaps the most explosive part of the Opinion concerns the concept of “Administrative Silence.”
In many jurisdictions (including parts of Spain and Italy), if a host applies for a license and the city does not respond, it is treated as a “negative silence”—an automatic rejection.
The Advocate General warns that this practice likely breaches EU rules. Under the Services Directive, the general rule is that authorization is deemed granted if the competent authority does not respond within the set period. Reversing this (treating silence as refusal) is only allowed if there is a compelling public interest reason, which must be strictly justified.
This shifts the administrative burden entirely onto the city. They can no longer simply ignore applications to freeze the market; they must actively process them or face automatic approvals.
What Happens Next?
It is important to note that the Advocate General’s Opinion is not a final judgment, but the CJEU follows these opinions in the vast majority of cases.
If the Court confirms this reasoning in its final judgment, it will shape the next generation of STR regulation across the EU. Cities like Barcelona, Paris, Amsterdam, and Berlin will need to audit their current licensing regimes to ensure they are not relying on “administrative silence” or vague urban planning criteria that fail the proportionality test.
For the STR industry, this Opinion offers a powerful new legal shield against arbitrary regulation. For municipalities, it is a call to professionalize and objectify their licensing procedures immediately.
