Amsterdam council was wrong to ban holiday rentals in three districts in 2020, according to the Netherlands’ highest administrative court.

In response to increasingly urgent demands for action, the city ruled that all Airbnb-style rental was forbidden in the red light district and parts of the canal ring due to overtourism that was severely affecting residents’ quality of life.

But while Amsterdam can potentially ban holiday rentals in an area, the Council of State has now ruled that it was incorrect to do so in the Burgwallen Oude Zijde, Burgwallen Nieuwe Zijde en Grachtengordel-Zuid.

“A total ban on holiday rentals in certain neighbourhoods is a far-reaching measure,” said the court. “It can only happen if there are good reasons for it related to the purpose and scope of housing laws. The city executive should first have investigated whether less drastic measures could be taken to reach the intended goal.”

The verdict suggested that instead of a total ban, Amsterdam could first have investigated whether a reduced quota of Airbnb-style rentals would have had an effect, or whether it could have been achieved by withdrawing permits from people whose rentals created nuisance.

The city introduced a holiday rental permit scheme in July 2020, with the requirement to register each visit with the city and an annual limit of renting out a private home for 30 nights a year. The Council of State pointed out the annual limit was reduced from 60 to 30 nights at the start of 2019, and the effects of this change had not been investigated when Amsterdam announced the district bans.

A lower court ruling in Amsterdam had already found that the total ban was in conflict with housing laws, however the Council of State said that a municipality did have the power to impose a total ban – if other measures had been tried and had failed.

The verdict is likely to have a broader impact as it is believed the city was considering extending the ban to more areas. Announcing a set of measures to reduce tourist nuisance last November, inner city chief Sofyan Mbarki suggested further sharpening measures around Airbnb-style rentals as well as converting cheaper hotels to homes and offices.

Last week, head of housing Zita Pels said in a council meeting that the city was going to the court of appeal to enforce fines for mistakes with holiday rentals, suggesting she believed more holiday rentals should become houses. “Liveability is under a huge amount of pressure, but…in our housing crisis, we would be better to use these places in our city to offer someone a home,” she said.

A spokesman for Amsterdam municipality told Dutch News. “The municipality will study the verdict and look at what it means for policy against illegal rentals and housing fraud.”

However Maarten Bruinsma, chairman of Amsterdam Gastvrij representing holiday rental owners, said the verdict established that policy making should be fair. “We are glad that the court confirmed today that a local ban on short term rental is not proportionate,” he told Dutch News. “We hope that the municipality will take a sober look at the data before engaging in any new restrictions. Amsterdam Gastvrij will continue to strive for fair and balanced policies on tourism, that enable well-intentioned hosts to participate.”

As part of the verdict, the Amsterdam public purse was ordered to pay court costs of €875 plus €3,348 in legal costs for the houseboat owners’ Woonbootvereniging Amsterdam and Amsterdam Gastvrij. They had appealed the original ruling and won a lower court case in Amsterdam in March 2021.