To solve the problem of high rents, the solution is more autonomy for the municipalities

The gentrification of urban centers has important consequences: as high-income people move into a neighborhood, local services adapt to their tastes and budgets in a virtuous circle that attracts families with ever higher incomes and increases the price of houses. Gentrification reinforces present but also future inequality: those who can settle in areas with greater opportunities will have children more likely to be wealthy in the future. The reduction in intergenerational mobility due to this phenomenon has certainly contributed to the sharp growth in income inequality over the past 50 years in the United States. So far the theory: the increase in demand that has characterized many cities and the consequent increase in house prices the more there are natural or “political” limits to new construction. All in all nothing strange, indeed the increase in demand for some of our cities is a positive fact. But with us there is one more element that we didn’t see coming. Airbnb is now a 10-year-old phenomenon but until 2 years ago those who wanted to make money with short-term rentals essentially had to organize themselves: registering the house with the municipality, online announcement, reception and guest documents to be communicated to the authorities, cleaning and taxes. Until recently it wasn’t a problem: there are a limited number of homeowners with the time and desire to do it themselves. But for 2 years now, hundreds of small companies have sprung up that you give them the keys to your house and they do everything for you: you get a net monthly transfer of everything. An absolutely meritorious and useful service, a new business that deserves all the success it has had. The point, however, is that no one has understood the disruptive scope, not of Airbnb, but of these companies that manage everything on behalf of the owner. The effect is that anyone who has a house to rent (after everything, commissions, taxes, etc.) has a +50-100% advantage in renting it short-term rather than with a standard rental contract. And this is true in the historic centers but it is also true in the second circle almost to the periphery of small cities such as Milan, Florence, Venice, Bologna where the occupancy rates of tourists are in any case such as to make the short-term rental convenient compared to the standard 4+4 year rental. What’s more, it is always exposed to the risk of lengthy eviction procedures (the policy favoring defaulting tenants is certainly a cause of the cul de sac we have entered). Not bad someone will say, the market wants it that way. However, it is enough to know that this apparent small thing (the lack of long-term rentals) will potentially upset the development model of our major Italian cities. Just think that 50% of residents in Milan 10 years ago are no longer today, although the total population is stable. They came to work or study temporarily, they rented and then they left. Perhaps with slightly smaller numbers, the same model applies to Bologna and Florence, which are university cities (Florence has come to block all new short-term rentals, with all the problems of fairness and legitimacy that such a rule can give). If students and temporary workers cannot find homes to rent, perhaps they will go to the suburbs or nearby cities and commute, or perhaps they will never come again. Or probably only the children of the very rich who can afford a house will. Each country has its own development model that you may like or dislike, you may want to change it, but you have to control the change, you cannot suffer it. Italy is built on a model in which 30% of young people from the south come to study in the universities of the north and feed the job market. If this model changes there will certainly be someone happier (the universities of the south) but I doubt that an unwanted and uncontrolled change could have positive effects, indeed perhaps very negative ones. What to do then? It is possible to build more, and in some cases it is being done, but this does not solve the rent problem. The problem is that with equal demand, under these conditions, the number of standard rental homes will further decrease as the old leases expire and homeowners learn about the higher return on short-term rentals. We need to make long-term rentals more affordable, especially as it has no alternative while short-term rentals have the alternative of low-priced hotels. With more effective laws on evictions and perhaps leaving the municipalities autonomous to obtain from rent taxes what they need to make urban policies. There is no need for a law that is the same for everyone, think how different the case of Milan and the Cinque Terre are. While regional autonomy is in serious crisis, this is an autonomy that is really needed.