MEPs have opened debate on the EU’s proposed Affordable Housing Act, which would give national and local authorities a clearer legal framework for restricting short-term rentals and some non-primary residential property use in areas facing severe housing pressure.

The European Parliament has begun examining legislation that would give cities and national governments greater legal certainty when restricting short-term rentals and the use or acquisition of residential property in areas where housing has become difficult to afford.

The proposed Affordable Housing Act, presented by the European Commission on 9 September, was on Parliament’s agenda in Strasbourg on Tuesday as housing costs move further into EU-level politics.

The legislation does not transfer general housing policy to Brussels. Decisions on construction, planning, rent policy and social housing would remain primarily with national, regional and local authorities.

Instead, the proposal would establish a common EU legal framework governing some restrictions that member states and cities may introduce when attempting to protect housing supply.

The draft regulation specifically covers measures restricting short-term accommodation in residential properties other than a host’s primary residence. It would also cover restrictions on the acquisition or use of land and housing that is not intended as somebody’s principal home.

Those provisions are designed partly to resolve a legal problem that has become increasingly important in cities with large tourism markets.

Local governments have introduced restrictions on holiday rentals and second-home use, but such measures can clash with EU single-market rules governing services, property and establishment. The Commission says the legislation would provide authorities with a clearer method for demonstrating when restrictions are justified and proportionate.

The law would therefore not impose a common European cap on Airbnb-type accommodation. Nor would it oblige cities to introduce restrictions.

Authorities choosing to intervene would instead have to demonstrate housing stress and ensure that their measures meet EU requirements on proportionality, transparency and review.

Brussels argues that the scale of Europe’s housing problem now affects more than social policy.

According to the Commission’s European affordable housing plan, house prices across the EU have risen by more than 60 per cent since 2013, while average rents have increased by about 20 per cent. Short-term rentals increased by 93 per cent between 2018 and 2024.

Only between six and seven per cent of EU housing stock is classified as social housing, while about 20 per cent of homes are recorded as unoccupied.

The Commission estimates that Europe needs to build more than two million homes a year to meet current demand — around 650,000 more annually than are presently being constructed. It estimates the additional investment requirement at approximately €153 billion each year.

Those figures underline a central difficulty in the housing debate: restrictions on tourist accommodation may return some properties to residential use, but they do not address the full shortage of new homes.

EU Today examined that wider supply issue when the Commission launched its European Affordable Housing Plan, which combines proposed regulation with investment, faster permitting, construction reform and changes to state-aid rules.

The debate is becoming more politically prominent as housing affordability affects a growing share of middle-income households as well as those on lower incomes.

Berlin offers one example. EU Today reported last month that advertised rents in the German capital had risen by roughly three-quarters in less than a decade, while the city calculates that it will need another 211,000 homes by 2040.

Pressure is particularly acute in large cities and tourism centres, where residential demand competes with short-term accommodation and investment properties.

The Commission argues that this has consequences for the wider economy because workers who cannot find affordable accommodation may be unable to move to areas where jobs are available.

That is why Brussels increasingly presents housing not only as a social concern but as part of the competitiveness and single-market agenda.

The proposal is still at an early stage. Parliament and the Council must negotiate the legislation under the ordinary legislative procedure, and substantial amendments remain possible.

Questions are likely to centre on how “housing stress” is defined, what evidence authorities must provide before restricting property use and how far EU law should permit local intervention in property markets.

The political dividing line is already apparent. One side of the debate stresses that cities need more freedom to protect permanent housing stock. The other warns that regulation of short-term rentals or second properties can affect tourism businesses, property owners and investment without necessarily creating sufficient new supply.

The Affordable Housing Act attempts to establish legal rules for that dispute rather than settle it centrally.

If adopted, its importance will therefore depend less on a single Brussels policy than on how individual European cities use the powers and legal protection it provides.

France and Germany have proposed giving the European Commission powers to respond within days to serious trade distortions, including the possibility of restricting access to the EU single market. The initiative comes as European concern grows over Chinese subsidies, industrial overcapacity and dependence on critical imports.

French President Emmanuel Macron and German Chancellor Friedrich Merz have called for a new European Union trade instrument capable of acting rapidly against countries whose economic practices cause serious disruption to the European market.

In a joint initiative sent to European Commission President Ursula von der Leyen on Monday, the two governments proposed strengthening the EU’s ability to respond to what they describe as systemic market distortions, including dumping, widespread subsidies and restrictions affecting access to critical supplies.

The Franco-German proposal does not formally identify China as its target. However, many of the practices it describes correspond directly to long-standing European concerns over Chinese industrial policy, including excess manufacturing capacity, state support and restrictions on exports of critical minerals.

The initiative represents a further development in a harder European approach towards Beijing. EU Today reported last week that China had warned it would respond if the EU introduced new restrictions against Chinese companies or products.

Macron and Merz are proposing two additional instruments.

The first would be intended to reduce European companies’ dependence on single suppliers for strategically important products and raw materials. The second would allow the EU to restrict access to its internal market when a third country uses political or economic measures that seriously undermine fair competition.

Under the proposal, the Commission could initiate countermeasures unless a qualified majority of EU governments voted to block them. That would reverse the normal political dynamic in which Brussels must first secure sufficient support before acting.

German officials have argued that the EU needs powers comparable in effect to the United States’ Section 301 trade measures or China’s ability to restrict exports of critical raw materials.

The Commission has welcomed the Franco-German intervention as a contribution to its work on economic security and global trade imbalances. Any new instrument would, however, require legislation and approval by both EU governments and the European Parliament before it could be used.

The proposal comes amid growing concern in both Paris and Berlin over the effect of subsidised Chinese production on European manufacturers.

Germany’s position is particularly significant. Berlin has traditionally been more cautious than Paris about measures that could restrict trade with China, reflecting the importance of the Chinese market to German carmakers, engineering companies and chemical producers.

That position has shifted as German industry faces increased competition from Chinese electric vehicles, machinery and other manufactured goods.

EU Today has previously examined the emerging Franco-German alignment on tougher China trade defences and demands from German manufacturers for broader European action rather than product-by-product investigations.

The new proposals go considerably further by seeking a mechanism capable of dealing with entire sectors and acting much more quickly than conventional anti-dumping proceedings.

Chemicals, PET plastics and hybrid vehicles are among sectors identified in the Franco-German document as areas where additional action may be required.

The timing is also significant. EU leaders are due to discuss trade relations with China at their summit in Brussels on 15–16 October, while Trade Commissioner Maroš Šefčovič is expected to hold talks with Chinese officials beforehand.

The Commission is already attempting to balance two objectives: maintaining Europe’s access to the Chinese market while reducing strategic dependencies that could be used as political leverage.

The Franco-German plan would give Brussels another instrument at the more coercive end of that policy. Its eventual importance will depend on whether governments agree to create it and how readily they would permit the Commission to use it against a major trading partner.

The European Commission is considering giving candidate countries wider access to the EU single market, research programmes and industrial cooperation before they become full members, as Brussels prepares a broader overhaul of its enlargement policy.

Under a draft proposal reported on Tuesday, Brussels would offer what it describes as “gradual integration”, extending access to trade, research, innovation and industrial cooperation as individual candidates bring their legislation into line with EU rules and demonstrate that they can enforce them.

The proposal would take considerably further an approach the Commission has been developing for several years. Its existing policy review on pre-enlargement reforms already provides for gradual integration into selected EU policies before accession, including early access to parts of the single market.

According to the reported draft, earlier integration would create new opportunities for EU businesses, reinforce European value chains and reduce strategic dependencies.

“Earlier integration will unlock opportunities for Union businesses, strengthen European value chains and reduce strategic dependencies,” the draft states.

The Commission would determine where sufficient regulatory alignment and enforcement capacity existed to permit deeper participation in research, innovation and industrial cooperation, as well as broader market access.

The arrangement would remain conditional. Candidate countries would not receive unrestricted access simply because accession negotiations had begun.

Instead, the extent of integration would depend on progress in adopting and enforcing EU legislation, as well as cooperation with Brussels on foreign policy, sanctions, investment screening, export controls and the protection of sensitive technologies.

Market access linked to strategic alignment

One of the most significant elements of the proposal is the connection between economic integration and the EU’s wider security policy.

As industrial and market integration deepens, participation in sensitive sectors would have to be accompanied by cooperation on investment screening, export controls, sanctions implementation and protection of sensitive technologies, according to the draft.

Access would also take account of strategic alignment, critical dependencies and a candidate country’s ability to manage risks involving infrastructure and supply chains.

The Commission has already established the principle that early integration into the single market requires both alignment with EU legislation and effective enforcement. Existing arrangements with Ukraine, Moldova and Western Balkan countries have been used to test integration in individual sectors before membership.

The new proposal would expand that model considerably.

It could also increase pressure on candidate countries whose foreign policies diverge from those of the EU, particularly over relations with Russia and China.

Ukraine and Moldova among countries targeted

Ukraine, Moldova, Albania and Montenegro are expected to be offered specific roadmaps intended to accelerate their integration over the coming years.

All four have advanced in the accession process, although at different speeds.

Ukraine and Moldova have moved into substantive negotiations covering the legislation and institutional reforms required for membership. As EU Today reported in June, the process now involves detailed scrutiny of the rule of law, public administration, democratic institutions and the ability to implement EU legislation.

Moldova is already being integrated into selected areas of the European economy. It has joined the Single Euro Payments Area and the EU’s roaming regime, while Brussels has also expanded its participation in European programmes. The Commission said after the EU-Moldova summit in June that gradual integration into the single market was already under way.

Ukraine has similarly been moving towards deeper economic integration through its existing free-trade arrangements with the EU and sector-by-sector alignment with European legislation.

Enlargement Commissioner Marta Kos has previously said that Brussels intends to accelerate Ukraine’s integration into additional parts of the single market before membership, adding that ideas developed for Ukraine should also be considered for other candidates.

A wider change to enlargement policy

The proposal comes as the EU attempts to resolve a central problem surrounding its current enlargement round: accession can take many years, while the political and economic consequences of keeping candidate countries outside the Union continue to grow.

Croatia, which joined in 2013, remains the EU’s most recent new member.

Several candidates have spent years — and in some cases decades — within the accession framework. Negotiations with Türkiye are effectively frozen, while Serbia, North Macedonia and Bosnia and Herzegovina have experienced prolonged delays.

Brussels is also considering how to protect EU decision-making and rule-of-law standards as membership expands. EU Today reported earlier this year that five member states had proposed additional safeguards for future members, including stronger monitoring and mechanisms intended to prevent individual governments from obstructing EU decisions.

Gradual integration offers a separate response to the same enlargement problem: economic integration would no longer have to wait until every stage of accession had been completed.

The European Parliament has backed the principle of merit-based and reversible gradual integration, including access to parts of the single market for candidates making sufficient progress. Parliament has also stressed that such arrangements should not become a substitute for membership or create different permanent categories of EU states.

Under the Commission’s emerging model, candidates could therefore move progressively into the EU’s economic and regulatory system while accession negotiations continue.

Full membership would remain the stated objective. But a process in which most of the economic advantages arrive only at the end could increasingly be replaced by one in which access is granted sector by sector as candidates meet the required conditions.

The Commission is due to present its assessment of how future enlargement will affect major EU policies, and what changes the Union itself will need to accommodate new members, on 6th October.