Do not rent for less than a day – Newspaper Kommersant No. 50 (7495) dated 03/24/2023

The Constitutional Court (CC) on Thursday prohibited equating short-term rental housing with hotel services automatically, without a “meaningful assessment” of such activities. And he obliged the legislator to clarify the features of short-term employment in such a way as to maintain a balance of interests of all participants in such legal relations. Experts believe that the decision of the Constitutional Court will not affect the market for short-term rental apartments, but litigation with neighbors, most likely, will not decrease.

Short-term rentals cannot be equated with hotel services without a “meaningful assessment” of such activities. This is stated in the decision, which the Constitutional Court announced on March 23. The reason for checking the provisions of Art. 17 of the Housing Code, which prohibits the placement of hotels in residential premises, was the complaint of the entrepreneur Pavel Bakhirev, who for a year and a half rented a Pskov apartment, including daily rent. But in 2020, the court forbade him to use housing to provide services, recognizing them as hotels.

The lawsuit was initiated by neighbors who complained about restless temporary residents. In addition, they argued, the active use of common property by numerous outside visitors posed a threat to the security of their home. Mr. Bakhirev argued that the challenged norm was inconsistent with the Constitution, since, due to its vagueness, it allowed the courts to equate the daily rent of an apartment with the provision of hotel services. But in fact, this is not the same thing, because the hotel implies the presence of a whole range of services. The legislator previously banned hotel activities in apartment buildings, but did not limit the minimum period of hiring, lawyer Vladimir Tsvil, who represented the applicant, said at a meeting of the Constitutional Court: this is an unsuitable and disproportionate restrictive measure that the courts “generate” on their own, although only the legislator has such a right.

Representatives of the legislative authorities did not support the applicant – in their opinion, he abused the right. The legislation does not and cannot have a ban on short-term hiring, said Alexander Konovalov, presidential representative in the Constitutional Court, but the mode of operation of residential premises should not differ much from the standard one and carry increased risks for other homeowners. But the Prosecutor General’s Office and Rospotrebnadzor unexpectedly sided with the author of the complaint, saying that the approach formed by the courts to qualify short-term hiring as hotel services infringes on the right of citizens to use their housing.

As a result, the CC left Withthe rule in force, stating that it does not in itself provide for a ban on short-term rental of residential premises. Moreover, in the economic sphere, renting out housing can significantly complement the hotel business and contribute to the development of tourism, and for citizens this sometimes becomes almost the only source of income. At the same time, the Constitutional Court noted, it is not legally established which particular set of services provided leads to the development of permissible hiring into the prohibited provision of hotel services. However, this does not prevent the courts from independently assessing all the terms of the transaction.

In the opinion of the Constitutional Court, the short term of housing provision, the use of special terminology in advertisements or the provision of transport services cannot serve as a basis for recognizing such a lease as hotel services, if this is not associated with an additional load on public infrastructure. In any case, the resolution notes, the applicant’s case should be reviewed, and the legislator should regulate the specifics of short-term rental of residential premises in apartment buildings. In particular, he can determine special rules for this activity for certain areas (for example, tourist places and resorts) or delegate this right to regions and municipal authorities.

Vladimir Tsvil told reporters that he was completely satisfied with this decision. According to him, the Constitutional Court faced a difficult task: to find a compromise between the interests of permanent residents and landlords, and this was done. “We believe that such a compromise has been found to the extent possible within the framework of the existing regulatory system,” the lawyer said. And although the legislator has yet to clarify the criteria for distinguishing between short-term employment and the hotel business, the Constitutional Court itself has already partially done this – and lawyers intend to take advantage of this, seeking a review of the case.

The approach formulated by the Constitutional Court will allow owners of residential premises to be more relaxed about advertising their services, notes Vladislav Vatamanyuk, managing partner of the Vatamanyuk & Partners law group. At the same time, he adds, this prohibits the activities of persons renting residential premises for a period of less than a day, as well as the activity of renting one premises to several guests or several premises in one house. According to the expert, this will not have a significant impact on the short-term rental housing market, but it is also unlikely to reduce the number of court cases.

The Constitutional Court gave only an approximate list of criteria by which it is possible to conclude that this is not a short-term provision of residential premises for rent, says Sergei Uchitel, partner at the Pen & Paper Bar Association. In the absence of clear legislative regulation, the decision of a particular contentious issue is left to the judicial discretion. Therefore, we should not expect any cardinal changes in reducing the number of illegal hotels and hostels in connection with the decision of the Constitutional Court, the expert concludes.

Anastasia Kornya