Judicial decision restricts the use of apartments for short-term rentals

The case concerned a property management company that had converted an apartment within a residential building into a short-term tourist accommodation. The building manager, who was also an apartment owner, brought legal proceedings, arguing that such use violated the building’s regulations, which expressly provide that the apartments are intended exclusively for residential use.

The court adopted an interpretation of considerable significance for the sector. Although the building regulations had been drafted in 1970—well before the emergence of short-term rental platforms—the court held that the co-owners’ intention was unequivocal: to prohibit any use resembling hotel or tourist accommodation. According to the court’s reasoning, short-term rentals do not constitute ordinary residential use but effectively transform an apartment into tourist accommodation, characterised by the continuous turnover of guests and operational features akin to those of a hotel.

Particular weight was given to the impact of this activity on the daily lives of the other residents. The court found that the constant turnover of visitors, the movement of luggage, the use of common areas, and the disturbance of the building’s peace and quiet fundamentally alter the residential character of the property and adversely affect the peaceful enjoyment of the permanent occupants.

The ruling is particularly significant because it confirms that the regulations governing apartment buildings may take precedence over a property owner’s right to exploit a property through short-term rentals, provided that those regulations contain clear restrictions on the permitted use of the apartments. In other words, the fact that legislation permits short-term rentals does not mean that such activity may be carried out irrespective of the contractual obligations arising under the building’s governing regulations.

For the real estate market, this development introduces important new considerations. Property management companies and investors who have acquired apartments for the purpose of generating income through Airbnb and similar platforms may need to review building regulations carefully before making further investments. At the same time, the decision is expected to encourage other apartment buildings to initiate legal proceedings against comparable activities, particularly in high-demand tourist areas such as Koukaki, Pangrati, Kypseli, and the historic centre of Athens.

The case also highlights a risk that many market participants have until now regarded as secondary: regulatory and legal use risk. In a market where the strong returns generated by short-term rentals have contributed to substantial increases in property values over the past decade, the possibility of restricting such activity through judicial decisions may have a material impact on both property valuations and investment strategies.