Short-term lettings: EU crackdown could also affect the suburbs – 51 out of 60 neighbourhoods are facing a housing crisis

The spectre of yet another crackdown looms over short-term lettings. With last year’s first nationwide crackdown now behind us, the focus of debate has shifted to the Affordable Housing Act, presented by the European Commission on 9 September and now going through the legislative process. The regulation clearly defines the relationship between short-term lettings and housing affordability: the Commission recognises that tourist lettings are not the main cause of the housing crisis, and the proposed restrictions are intended as a temporary measure to curb demand. Among the criteria identified, the critical threshold is triggered when it takes at least eight years’ worth of per capita income to purchase an average home, provided that this ratio has increased over the last ten years. It must also be demonstrated that, without intervention, the situation is not set to improve over the next three years. If, on the other hand, the ratio is equal to or greater than ten, the area is automatically classified as critical.

A simulation of the effects that the implementation of the regulation might have in Italia paints a picture of significant pressure not only on historic centres but also on some more outlying neighbourhoods. It should, of course, be borne in mind that the text could still be amended and that it remains to be seen what the specific implementation details will actually be. Looking at the five cities that account for around 80 per cent of tourist rentals – Milan, Rome, Florence, Venice and Naples – 51 of the 60 most representative neighbourhoods (both central and peripheral) are above the critical threshold of 8, and around 31 areas exceed 10. Among the highest figures in the entire sample, Duomo-Signoria in Florence stands out with an index of 20 and Cannaregio in Venice at 19.5. These are followed by San Carlo-Palazzo Reale in Naples (14.1), Trastevere in Rome (13.9) and Duomo in Milan (10.3). The disparity between the cities is not limited to the peaks, but extends to the entire sample: in Florence and Venice, all 12 neighbourhoods analysed exceed the critical threshold.

The case of Milan is interesting, as only 5 of the 12 neighbourhoods in the sample exceed the threshold. Some semi-central areas – such as Porta Ticinese or Missori – are in fact below the 8 threshold, a limit which is, however, exceeded in several outlying districts such as Bicocca, Santa Giulia and Cascina Merlata (ranging from 9 to over 8). ‘This is because,’ explain the experts at Scenari Immobiliari, ‘in central neighbourhoods, a high per capita income can offset high prices, whilst in some outlying areas, house prices – even if lower than those in the centre – can still be a heavy burden relative to local incomes.’

The figures come from an analysis by Scenari Immobiliari carried out for *Il Sole 24 Ore* covering a total of 474 neighbourhoods. When the analysis is extended to all the areas surveyed, the picture changes significantly: just over 43 per cent of the total exceeds the threshold. The simulation shows that cities with fewer neighbourhoods remain those with the highest proportion of areas above the threshold (around 68 per cent), because their urban area largely coincides with the historic centre or tourist areas, where services and short-term lettings are concentrated. To construct the simulation, the formula set out in the European draft was used, which compares the average transaction price of an average dwelling in the neighbourhood (in this study, a two-room flat) with the average per capita IRPEF income provided by the Ministry of Finance, with an estimate made for each area. This is the only data available in Italia at such a granular territorial level, but it is technically different from the per capita disposable income expressly referred to in the European regulation.

According to Aigab, one of the main issues with the EU regulation is precisely this: ‘The price-to-income ratio required by the regulation is based on per capita disposable income at municipal level, which does not exist as an official statistic in Italia,’ explains Marco Celani, president of Aigab. ‘The only available source is IRPEF income per taxpayer, which is a different concept because it excludes those who do not file a tax return.’ According to the association’s calculations, the risk is that the index would be overestimated across various municipalities, by an average of 32.6 per cent, with peaks of up to 80 per cent in Naples. “A CIN/housing stock ratio with a threshold of 5 would be a more accurate indicator than the price-to-income ratio,” points out Celani, “because it directly measures the impact of short-term lets on the housing stock.”