Airbnb breaches EU consumer rules, must fall into line

EU Justice Commissioner Vera Jourova said Airbnb should state whether accommodation is offered by a private individual or a professional, provide details of the price in a clear way and modify its terms of service. (AFP)
Updated 16 July 2018
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Airbnb breaches EU consumer rules, must fall into line

BRUSSELS: The EU told Airbnb on Monday to bring its terms and conditions into line with the bloc’s consumer rules or face action by national consumer agencies, after a review of the short-term rental platform found some violations.
Some of Airbnb’s terms and the way it presents its prices breach the bloc’s unfair commercial practices directive, the unfair contract terms directive and the regulation on jurisdiction in civil and commercial matters, the EU executive said.
San Francisco-based Airbnb and similar rental platforms, which help homeowners rent out their homes or rooms for short periods, have grown in popularity in recent years because of their competitive prices in comparison with hotels.
“But popularity cannot be an excuse for not complying with EU consumer rules. Consumers must easily understand ... how much they are expected to pay for the services and have fair rules for example on cancelation of the accommodation by the owner,” EU Justice Commissioner Vera Jourova said in a statement.
The company has until the end of August to present its proposals for responding to the criticism which will then be reviewed by the Commission and national consumer authorities. It could face fines if it does not comply with EU rules.
The EU executive said Airbnb should state whether accommodation is offered by a private individual or a professional, provide details of the price in a clear way and modify its terms of service to make them fairer to consumers.
Airbnb did not immediately respond to a request for comment.
The issue came to light after national consumer agencies in June examined Airbnb’s business practices published in different languages.
Rental platforms have come under fire for driving up property prices and contributing to a housing shortage in Paris, Berlin, Amsterdam and other big cities.


Dubai property developers put bond plans on hold

Updated 46 min 37 sec ago
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Dubai property developers put bond plans on hold

  • Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales
  • Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year

DUBAI: Dubai’s Emaar Properties and state-owned developer Nakheel have put on hold plans to issue US dollar-denominated bonds, Emaar and sources familiar with the bond issues said, amid a real estate downturn and volatility in emerging markets.
Emaar told Reuters that it had put on hold a planned bond issue, blaming rising interest rates but did not elaborate. Nakheel declined to comment.
Three financial sources said the firms had planned dollar-denominated sukuk, or Islamic bonds, and would have had to pay a yield premium to attract enough investors due to concerns about Dubai’s property price slide and emerging market volatility.
Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales, although the slide has not come close to the more than 50 percent plunge seen in 2009-2010, which pushed Dubai close to a debt default.
Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year, according to Savills. The drop has hurt developer earnings.
Emaar, developer of Burj Khalifa, the world’s tallest building, reported a 29 percent fall in the third quarter last year, while Dubai’s second-largest listed developer DAMAC reported a 68 percent drop.
The financial sources said Emaar and Nakheel hired banks a few months ago to issue Islamic bonds but shelved the plans.
An Emaar spokesperson said its decision to put its plan on hold was not linked to the property market performance.
“The bond was considered more than a year ago and was put on hold due to increasing interest rates. The decision was not based on market conditions,” the spokesperson said.
Dubai government owns a minority stake in Emaar.
Nakheel, developer of palm shaped islands off Dubai, was one of the worst hit by Dubai’s 2009-2010 real estate crash, forcing it into a massive debt restructuring. It has not issued public debt since it nearly defaulted in 2009.
The market downturn has put pressure on property companies’ existing bonds, which investors use as a parameter to establish the price of new debt sales from borrowers in the same sector.
In secondary debt markets, yields of bonds issued by Dubai developers have risen significantly over the past few months, underperforming corporate debt from other sectors.
DAMAC’s $500 million sukuk due in 2022 and $400 million Islamic paper due in 2023 saw their yields spike by over 200 bps and 150 bps, respectively, since early November.
BofA Merrill Lynch last week forecasted weaker booked sales and gross margin for DAMAC, saying it was likely to be pressured by the property market and upcoming debt and land payments.
DAMAC did not immediately respond to a request for comment.
Yields on a $600 million sukuk issued by private developer Meraas, due in 2022, have jumped by around 120 basis points in the same period. Meraas declined to comment on the move.