EU Proposes New Restrictions on Short-Term Housing Rentals

WELT

The European Commission has developed a new package of measures to address the housing crisis in EU countries. The Affordable Housing Act allows short-term rentals to be restricted in locations with the highest concentration of such properties. The initiative also provides for faster construction and renovation, the conversion of buildings and increased investment.

Common Rules for Europe’s Rental Market

More than half of city dwellers consider the situation in the housing market one of the most pressing problems in Europe, according to the latest Eurobarometer survey. High rental and purchase costs also limit labour and educational mobility, making it more difficult for workers and students to choose a place to live near their workplace or place of study, European Commission President Ursula von der Leyen noted.

The European Commission is proposing to establish, for the first time, a common EU framework for assessing measures that affect housing affordability and Single Market rules. Decisions on restrictions will remain with national, regional and local authorities in accordance with the principle of subsidiarity.

A common methodology will be introduced for areas facing the greatest housing pressure. The criteria will include a high ratio of property prices to household incomes, as well as a sustained increase in this ratio over 10 years. The assessment will take into account not only the current situation but also long-term trends.

The need for a common approach is also linked to the different models used to regulate short-term rentals. Paris, Barcelona and Venice have already introduced restrictions, some of which have become the subject of legal disputes. The new rules are intended to establish common criteria for assessing such measures under EU law.

The Affordable Housing Act is part of the European Affordable Housing Plan, which also includes updated state aid rules for affordable housing projects and the European Strategy for Housing Construction. The initiative complements EU rules on short-term rentals, which have been in force since May 2026. The European Commission’s proposal must be considered by the European Parliament and the Council of the EU under the ordinary legislative procedure.

Which Properties Could Face Restrictions

Short-Term Rentals in Europe

The Affordable Housing Act sets specific requirements for short-term rentals in cities and popular tourist destinations where this segment may reduce the supply of housing for permanent residents. When assessing the situation, authorities will consider the scale of the market, the frequency of rentals and the commercial nature of the activity.

To introduce restrictions, authorities will have to demonstrate that short-term rentals have had a significant impact on housing affordability or availability for at least three years. They will also have to show that other measures would not produce a comparable result.

When developing measures, authorities are expected to use data collected under existing EU rules on short-term rentals. Since May 2026, these rules have increased transparency in the sector and given authorities access to information about properties. Listings that do not comply with the requirements must be removed or disabled.

The new act does not introduce a blanket ban on short-term rentals across the EU. Instead, it sets out the conditions under which cities and regions may restrict the segment if they can demonstrate its impact on the local housing market.

Second Homes and Vacant Properties

The European Commission also proposes taking other forms of property use into account. These include second homes and apartments, as well as properties that remain unused for extended periods. Measures addressing long-term vacancy are expected to take legitimate reasons for non-occupation into account.

Conditions for purchasing second homes cannot be applied retroactively to completed transactions. Transitional arrangements will be introduced to protect the rights of existing property owners.

The European Commission also recommends increasing housing supply by speeding up approvals, unlocking land, building new homes, renovating and converting existing buildings. Modernising planning and construction procedures should help reduce the time needed to complete new projects.

Experts: Focus on Construction

EU Commissioner for Energy and Housing Dan Jørgensen considers short-term rentals one of the causes of the housing supply shortage, but not the only one. He noted that the new rules would not solve the housing affordability problem “overnight”, but could address one of the factors driving residents to leave cities.

European Parliament member Markus Ferber identified insufficient construction volumes as the main problem. He called on the European Commission to determine which European regulations are preventing new projects from being developed and described the approach as misguided.

President of the European Committee of the Regions Kata Tüttő called for increased investment in housing construction. She also pointed to a possible conflict with the proposed EU budget for 2028–2034, which, in her assessment, would weaken the influence of cities and regions over investment allocation and reduce access to financial instruments used to implement local housing strategies.

Airbnb also links the crisis primarily to insufficient housing supply. George Mavros, the company’s representative for relations with EU authorities, said that the focus should be on construction, renovation and bringing vacant homes back onto the market. Following the European Commission’s announcement, Airbnb shares fell by around 3%.

Alexandre Roure, head of policy at CCIA Europe, believes that independent scrutiny of cities’ decisions or an effective appeals mechanism is needed. Without such oversight, disproportionate restrictions could remain in place, while the legal certainty that the Affordable Housing Act is intended to provide could be undermined.

What This Means for Investors

Analysts at International Investment note that Europe is continuing to tighten regulations in the real estate sector. Buying a property exclusively for short-term rental is becoming a less predictable strategy, particularly in tourist cities facing housing shortages and rapid price growth. Regulatory changes are already affecting the ability to rent out properties on a short-term basis, as well as their future liquidity and value. The new rules could reinforce this trend and make returns from such properties more dependent on decisions by local authorities.

For investors, this increases the importance of assessing a property over the longer term. When purchasing real estate, it is important to consider not only current rental returns but also the possibility of changes to rules governing its use. This is particularly relevant in markets where property prices are rising faster than household incomes and authorities are already facing shortages of affordable housing.

European policy is also shifting its focus towards increasing the housing stock. Faster construction, renovation and conversion of buildings are creating new opportunities for capital. Development projects may prove more resilient than buying completed apartments solely for short-term rentals. The hotel sector also remains a promising area, receiving government support as part of efforts to develop tourism infrastructure.