Per diems versus hotel allowances – Newspaper Kommersant No. 23 (7468) dated 02/08/2023

The Constitutional Court will decide whether owners can rent their apartments by the day and under what conditions. After the ban on hostels in residential buildings, short-term apartment rentals have become a convenient loophole for owners of well-located housing, but the courts close it, interpreting such rentals as hotel services. Apartment owners believe that this practice limits their right to freely dispose of their property. But such a right cannot be exercised at the expense of other tenants, authorities object.

The Constitutional Court (CC) on February 7 discussed the provisions of Art. 17 of the Housing Code, prohibiting the placement of hotels in residential premises. The reason for the check was the complaint of businessman Pavel Bakhirev, who for a year and a half rented his apartment in the center of Pskov, including by the day. However, in 2020, the Pskov City Court banned him from using the apartment to provide services, recognizing them as a hotel.

The lawsuit was initiated by neighbors who complained about the noisy entertainment events of 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 went to the Supreme Court, but he never managed to get the ban lifted. He argued that the provision of housing under a short-term rental contract does not apply to hotel activities. However, all instances confirmed that the systematic rental of apartments with a minimum period of one day, indicating the conditions of booking, the time of arrival and departure, the availability of food and drinks in the room, as well as the transfer service, is still a hotel business, and not just a rental .

According to the Applicant, the disputed norm does not comply with the Constitution, because, due to its vagueness, it allows the courts to equate the daily rent of an apartment with the provision of hotel services, although in fact this is not the same thing, because the hotel presupposes the presence of a whole range of services. At one time, the legislator banned hotel activities in apartment buildings, but did not set any deadlines for hiring, lawyer Vladimir Tsvil, who represented the Pskov entrepreneur, reminded the judges 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 legislature, in turn, insisted that the disputed norm does not contain legal defects that would allow restricting the right of the owner, just the courts interpret it incorrectly. Placing an ad on booking sites and cleaning the apartment in itself are not signs of the provision of hotel services. To resolve this issue, an analysis and generalization of judicial practice should be carried out, said Yury Petrov, representative of the State Duma in the Constitutional Court. Senator Irina Rukavishnikova, representing the Federation Council, also agreed with him, but she suspected the applicant of abusing the right: after all, the court found a violation of the rights of residents, she recalled.

In such cases, the courts should assess the imaginary nature of the deals being concluded, Alexander Konovalov, the presidential representative in the Constitutional Court, supported the senator. He recalled that the injunction against renting out the applicant’s apartment had been initiated by neighbors who suffered from constant turnover.

The legislation does not and cannot have a ban on short-term hiring, but the mode of operation of residential premises should not differ much from the standard one and carry increased risks for other homeowners, Mr. Konovalov emphasized.

But the Prosecutor General’s Office and Rospotrebnadzor suddenly sided with the owners. The representative of the Prosecutor General in the Constitutional Court, Vyacheslav Rosinsky, stated that the decisions of the courts in the applicant’s case cannot be considered justified: the facts of violation of the rights of residents in this dispute were not investigated and were not proven. In addition, he added, the lessor’s failure to comply with his obligations should not lead to the defeat of his rights as an owner, and in this sense, the emerging practice is contrary to the Constitution. According to the Prosecutor General’s Office, it is necessary to more clearly distinguish between the concepts of “hotel services” and “provision of housing under a short-term lease agreement.”

Rospotrebnadzor, in its response, noted that the approach to the qualification of short-term employment formed by the courts infringes on the right of citizens to use their housing.

There is no exact data on the size of the short-term rental market in Russia. The Avito Nedvizhimost database now contains 159.44 thousand apartments, which is 26.5% higher than the figure for the same period last year. But we are talking about the low season, and apartments do not form the entire volume of supply, private housing and rooms are also on the market, the company warns.

Now owners who rent apartments for short-term rent are registered as self-employed or individual entrepreneurs, says Yury Kuznetsov, founder of Sutochno.ru, otherwise they would have to pay a 13 percent personal income tax, which is less profitable. At the same time, they usually try to maintain good relations with their neighbors and ask themselves to report cases of unpleasant behavior by residents, the expert notes: compliance with sanitary standards and the regional “quiet law” is a standard requirement of a short-term lease.

In the short-term rental service Tvil.ru, Kommersant was told that complaints from neighbors arise quite often, but the service tends to work through management companies that independently solve problems with residents.

Uncertainty in this matter was added by the law that entered into force on October 1, 2019, prohibiting the provision of hotel services in residential premises, explains Alexei Kozhevnikov, a member of the public expert council of the tourism national project. According to him, the bill on tourist housing, which provides for the registration of each object and the assignment of an individual number to it, should have removed the daily rent from it, according to him. In 2021, this project received positive feedback from the Ministry of Economy, Rospotrebnadzor and the Federal Antimonopoly Service, but then its progress slowed down, the expert points out. Nevertheless, the owners still have the full right to dispose of their property and, in particular, to rent out apartments, Yuri Kuznetsov insists, referring to Art. 35 of the Constitution, which guarantees the right to private property. “We are waiting for a decision on this complaint,” he sums up.

Anastasia Kornya, Alexandra Mertsalova