23 / 08 / 2026
13 Minute Read

Airbnb rentals in the City of Zurich: The court ruling that changes everything!

 

Starting in the fall of 2026, Airbnb and short-term rentals will face tough times in the city of Zurich… In June 2026, this news made the front pages of several major newspapers in German-speaking Switzerland. There has been less coverage of it in the rest of the country, and as I write this article, I haven’t yet heard of any foreign media outlets that have found the topic worth covering. So, although I’m not a journalist, I’m taking on the challenge of covering it in my own way: to the point, concisely, and above all, by offering you a perspective that goes a little further than simply repeating the facts presented to us in the mainstream German-speaking Swiss newspapers.

For those who may not be aware, the city of Zurich, which has been grappling with growing tension in its real estate market for several years, had engaged in a legal battle aimed at imposing stricter regulations on residential use. This policy was recently upheld by a major ruling from the Federal Supreme Court. The country’s highest court has, in fact, ruled in favor of the municipality in its effort to regulate “business apartments” and Airbnb-style rentals. This legal precedent marks a decisive turning point that redefines the scope of property rights in dense urban areas, prioritizing the protection of the residential rental market over commercial use deemed more lucrative.

My analysis aims to summarize the ins and outs of this decision, outline its legal implications, and, above all, detail its concrete impacts on the various stakeholders, including property owners, the rental market, hoteliers, and travelers seeking an Airbnb or short-term rental in the city of Zurich.

 

Urban regulation vs. economic freedom

The City of Zurich recently amended its Planning and Building Act (Planungs- und Baugesetz, PBG) to introduce a restrictive provision aimed at prohibiting a change of use when a dwelling intended for ordinary residential use is effectively converted into housing intended for commercial stays or short-term commercial activities (business apartments, furnished tourist apartments, Airbnb apartments, or units used as showrooms, offices, artists’ studios, medical offices, or massage parlors, for example). According to the city’s assessment, the proliferation of such accommodations (often managed by digital platforms like Airbnb or specialized companies) removes thousands of units from the traditional rental market. However, in a city where the rental vacancy rate is structurally below 1%, this removal exacerbates the shortage and contributes to skyrocketing rents (finding housing in the city of Zurich has become nearly impossible for many families, as well as for people living alone).

In response to these strict regulations, owners and professional operators of business apartments and Airbnb rentals have challenged the measure. Their argument was based primarily on economic freedom and the right to property, arguing that short-term rentals, including Airbnb listings, even when furnished, remain a form of housing that should not be subject to licensing requirements as strict as those for hotels.

 

The Federal Supreme Court’s decision

The Federal Supreme Court dismissed the appeals filed by the operators and ruled that an Airbnb apartment rented for a few nights or weeks for business or tourism purposes constitutes commercial use (hotel or hotel-like). Consequently, it is not eligible for the protections afforded to residential housing. The court also recognized that combating the housing shortage constitutes a sufficiently strong public interest to justify a restriction on property rights. By preventing entire buildings from being converted into Airbnb accommodations or de facto hotels without meeting hotel standards (safety, accessibility), Zurich’s law now protects the urban interests and its inhabitants. This decision does not ban short-term or Airbnb-style rentals in Zurich, but it does heavily regulate them by imposing (retroactive) restrictions that require those affected to comply with the new rules and force those who cannot to cease their operations.

 

The end of disguised “Business Apartments”

This court ruling puts an end to a gray area. Until now, many buildings were entirely dedicated to short-term rentals under the guise of “serviced residences” or “business apartments”, essentially short-term Airbnb rentals, thereby circumventing the strict regulations governing the hotel industry. The Federal Court’s decision validates the city’s effort to reclassify these uses as commercial activities requiring specific permits, which are often impossible to obtain in residential zones.

 

What is this new regulation all about?

The new regulation targets commercially operated short-term rentals in residential zones. The ban is enforced through a rule called the "Mindestwohnanteil" (minimum housing quota) which specifies that each building zone in Zurich has a required percentage of its floor space that must be used for long-term housing. This quota is often between 60% and 90%. Previously, business apartments (Airbnb rentals) counted toward this quota but under the new rule, they will no longer count. Therefore, in a building with an 80% housing quota, at least 80% of the space must now be regular, long-term apartments, effectively banning commercial short-term rentals in that space.

The prohibition is specifically aimed at commercial providers (companies) that operate multiple furnished apartments for short-term stays. Indeed, based on multiple reliable online sources, an estimated 5,320 business apartments/Airbnb rentals existed in Zurich by the end of 2025, with the new rule potentially affecting "well over 1000" of them. The rule targets these commercial operations to return them to the regular housing market.

The restriction applies in areas with high minimum housing quotas. It is less effective in areas like the city center, near the lake, and around train stations where the housing quota is low (under 25%). However, it's important to note that nearly 90% of all apartments in Zurich are in zones with a quota over 50%, meaning the ban will have a significant impact citywide.

As mentioned in the beginning of this article, the new rule is expected to come into force in autumn 2026. Once in effect, property owners must declare the use of their apartments in building applications, and any change to a business apartment will require a permit. The city will also monitor compliance.

 

The impacts of this law on various stakeholders

The consequences of this court ruling are significant. Not only do they draw a clear line between small, occasional landlords and institutional investors, but they also pave the way for a more competitive short-term rental market, while revitalizing the hotel industry. As for clients and travelers looking for a short-term rental or an Airbnb in the city of Zurich, they are likely the biggest losers in this legal decision, and we’ll see why.

 

The impact on institutional investors and Business Apartment operators

For this sector, the decision is akin to a financial and legal earthquake. Buildings whose profitability was based on high occupancy rates and high nightly rates are experiencing an immediate decline in value. A building consisting of business apartments or apartments rented exclusively through Airbnb or for short-term stays can no longer be sold based on its commercial return; it is now valued as a standard rental property. In the city of Zurich, many buildings are affected (I’m thinking in particular of the major players in the temporary housing rental market in Zurich, such as Vision Apartments, Swiss Star, City Stay…), and now, overnight, their operation may become illegal or only partially viable. The owners of these properties may be forced to re-enter them into the traditional rental market. This will involve signing open-ended or long-term leases, complying with rent controls (to prevent excessive rents), and losing the pricing flexibility offered by furnished tourist accommodations. Owners who refuse to comply face cumbersome administrative proceedings. Based on the Federal Supreme Court’s ruling, the City of Zurich now has a solid legal basis for issuing bans on the use of the premises and imposing fines.

 

The impact on private owners (small landlords)

The situation is more nuanced for owner-occupiers or those who own only one apartment. The major change is that owners can no longer unilaterally decide to remove their property from the rental market to list it on Airbnb full-time. If they wish to do so beyond a certain limit (often 90 days per year for their primary residence, but virtually prohibited for a second home), they must obtain authorization to change the property’s designated use (a lengthy and complex administrative process with no guarantee of a positive outcome). It is important to note that the Federal Court does not object to the occasional rental of one’s primary residence during vacations. “Home sharing” (sharing one’s primary residence) remains tolerated, as it does not structurally disrupt the housing market. For the average homeowner, the line between what is permitted and what is not becomes a fine one. Owners must now self-report and ensure that, by renting out their homes on Airbnb, they do not cross the critical threshold of a “commercial rental.”

 

The impact on the short-term rental/Airbnb market in Zurich

In my opinion, the most immediate and visible consequence of the Federal Supreme Court’s ruling (which will take effect in the fall of 2026) will be a massive reduction in the number of properties available on short-term rental platforms such as Booking.com or Airbnb.

Hundreds, if not thousands, of properties will be removed from this market, while demand for short-term rentals in Zurich will remain very strong. When supply decreases while demand remains constant or increases, the market becomes more competitive; not because prices fall due to competition, but because there will be more clients (short-term renters) vying for a scarce supply. Competition will shift to the demand side, not the supply side. This scarcity will automatically lead to higher prices. Landlords who remain active in the short-term rental market will be able to charge higher rates for their Airbnb listings, as travelers will have few alternatives.

 

The impact on the hotel industry

With fewer Airbnb listings and short-term rentals available, some of the demand will inevitably shift to the traditional hotel sector. However, Zurich hotels already charge some of the highest rates in Europe. This shift in demand toward hotels will exert additional upward pressure on hotel prices, which, in turn, will allow the few remaining Airbnb listings to align their rates with this new, higher benchmark. Nevertheless, the Federal Supreme Court’s ruling offers Zurich’s hotel sector a historic opportunity to restore its dominant position in the short-term lodging market. The elimination of unfair competition, the automatic shift in demand, the ability to raise rates, and the capacity to develop differentiated offerings all serve as growth drivers for this sector.

 

The impact on travelers

Although the media does not report on it, this analysis shows that travelers remain the biggest losers in this “cleaned-up” market. The Federal Court’s ruling was hailed by municipal authorities, tenant advocacy groups, and a segment of the population as a victory against real estate speculation and the housing shortage. Landlords, for their part, have seen their operational freedom curtailed. However, beyond these obvious stakeholders, it is a more discreet figure who will bear the most tangible consequences of this decision: the traveler; whether a tourist, a business traveler, a student on exchange, or a patient seeking medical care. The traveler, often overlooked in analyses, will nevertheless find themselves at the center of an upheaval that affects their budget, their comfort, their freedom of choice, and, more fundamentally, their experience of the city.

Until now, an Airbnb apartment or a business studio allowed travelers to find lodging in Zurich at a cost that was often 20% to 40% lower than that of a hotel room of comparable quality. As this option has become scarcer, travelers find themselves stuck with traditional hotels (which, incidentally, aren’t always suited to the specific details, needs, or constraints of their stay), whose rates in Zurich are among the highest in Europe. A night’s stay in a three-star hotel in Zurich commonly exceeds 200 Swiss francs, and four- or five-star establishments charge significantly higher rates. And as I mentioned in the previous chapter, hotels (noting the influx of pent-up demand and the disappearance of competition) will be in a position to raise their own rates. Travelers will thus face a double whammy: they will lose the budget-friendly alternative and see prices for the remaining option rise. For those on the tightest budgets, the consequence is harsh: canceling the trip, shortening the length of stay, or staying on the outskirts of Zurich. For travelers who visit Zurich regularly and who, until now, have appreciated the flexibility, independence (cooking their own meals, hosting guests, working in a comfortable environment, doing laundry…), freedom of choice, and preferential rates offered by their Airbnb rental.

 

Airbnb and Aparthotel rentals: The specific case of Escorts in Zurich

I cannot analyze this situation without mentioning the case of the many independent escorts who work in the city of Zurich and who represent a very significant clientele for many Airbnb listings, short-term rentals, and aparthotels located in the heart of Zurich. Soon, for many of them, living and working in Zurich on a temporary basis will become prohibitively expensive. Only the most organized (those who are able to plan their trips in advance to secure a place to stay and save money), the most established (those who already have a regular clientele and thus a solid income), and/or those who have managed to build a relationship of trust with establishments where they can legally rent rooms or apartments in Zurich will still be able to work with peace of mind in the country’s economic capital (furthermore, it should be noted that, given the current situation, the managers of these apartments will also become more demanding and selective in choosing the tenants to whom they wish to rent their apartments). Others, lacking the means, organization, and/or contacts, will have to settle for going to a hotel (not always ideal in this context, and clients tend to prefer this “incall” option less) or finding lodging on the outskirts of Zurich; an area where we can also expect an increase in rental prices for temporary housing/Airbnb, mainly due to upcoming restrictions imposed by the city of Zurich. Logically, there will be a decline in the number of independent escorts in Zurich in the near to medium term is to be expected.

Of course, some escorts in Switzerland will choose to ignore this new law. Independent service providers from the European Union who are required to register themselves (before beginning their work as an escort) can expect to have their online declaration rejected if their temporary address in Zurich is not authorized to accept short-term or Airbnb-style rentals. As for those who already hold a work permit in Switzerland, they will face the same dilemma as their colleagues: finding an apartment in the city of Zurich where they are legally permitted to work as an escort.

 

Restrictions on short-term rentals/Airbnb in Zurich: Is this the solution?

I believe that the Swiss Federal Court’s decision was presented as a victory for the city’s residents. It will free up Airbnb listings for the residential rental market, combat speculation, put an end to a legal gray area, restore a degree of competitive fairness to the benefit of the hotel industry, and reaffirm the primacy of the public interest over the freedom to operate a business. However, this victory will come at a considerable and unevenly distributed cost: Airbnb hosts will suffer an immediate decline in the value of their assets and a loss of profitability, without compensation; hoteliers will emerge stronger, but their advantage will be largely temporary; and travelers, the ones largely overlooked in this case, will lose out on every front: higher prices, a more limited selection, a diminished experience, and compromised accessibility.

More fundamentally, it’s worth asking whether this decision solves the underlying problem. Not necessarily! Some point out that Zurich’s residential housing shortage won’t be resolved simply by restricting short-term rentals/Airbnb. Others argue that only a large-scale policy of construction, densification, and rent control could provide a sustainable solution.

 

Janet – The Velvet Rooms

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