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.
The European Commission calls it the Affordable Housing Act and says it can “truly bring a change in people’s lives”. But how much will it actually do to make housing more affordable, asks Catherine Feore?
The tension at the heart of the proposal is that Brussels is making ambitious claims about tackling the housing crisis while simultaneously making clear that it is not imposing new housing policies on governments or cities.
Commission President Ursula von der Leyen says the measure fulfils a promise to tackle housing affordability, describing it as “one step in this direction” and declaring: “Today, we are delivering for all Europeans.” Housing Commissioner Dan Jørgensen went further, saying the Act gives governments and cities tools to “make more affordable homes available”.
Yet the proposed legislation itself is considerably more cautious.
The Commission acknowledges that insufficient housing supply is the structural cause of the affordability crisis. Short-term rentals, second homes and other non-primary uses are not the root problem, although they can exacerbate shortages and push up prices in already constrained markets.
Housing stress test
The Act principally delivers a common legal framework for authorities that choose to intervene.
Central to this is a new EU test for housing stress. An area would normally qualify where an average home costs at least eight years of disposable per-capita income, that ratio has increased over the previous decade, and pressures are unlikely to ease over the next three years. At a ratio of ten or more, the historical deterioration test is dropped. Population dynamics, housing supply and demand must also be assessed.
Authorities could then restrict short-term rentals outside a host’s primary residence or tackle second homes, prolonged vacancy and certain other non-primary uses. But there is no obligation. They must also demonstrate that the activity has significantly harmed housing affordability or availability for at least three years, and any restriction must be targeted, necessary and proportionate. This seems to set a high bar of evidence for most local authorities.
Currently, local authorities must notify the Commission of short-term rental restrictions under the Services Directive. That notification requirement will no longer be required. Cities can use the new framework without seeking prior Commission approval, although measures must be published and remain open to legal challenge. Officials argue this will remove a burdensome procedure and make intervention easier.
But the Commission is equally explicit about what it is not doing. The Act does not regulate rents, harmonise housing policy, give Brussels new housing competences, dictate taxation, inheritance or planning, or require, recommend or encourage authorities to impose restrictions. Housing policy choices “remain national, regional and local”.
Executive Vice-President Teresa Ribera says that when markets fail to provide affordable homes, “public authorities have a responsibility to act”. But the Act does not compel that action; it provides a stronger legal framework if authorities choose to act independently.
Its impact could be real in tourist hotspots where non-primary housing use is demonstrably worsening shortages. But it cannot itself build a home or lower a rent. The question is whether a clearer legal toolbox matches the expectations created by the Commission’s promise to tackle Europe’s housing crisis. When asked to quantify how much of a difference the new provisions could make, the Commission couldn’t give precise figures, saying that it would depend on the measures adopted.
PHOTO CREDIT: Teresa Ribera, Executive Vice-President of the European Commission for a Clean, Just and Competitive Transition, and Dan Jørgensen, European Commissioner for Energy and Housing, give a press conference on the affordable housing Photographer: Jennifer Jacquemart © European Union
America’s elders need more places to live, but even in liberal enclaves that recognize the problem, developers are facing fierce foes: America’s elders. Make it make sense! Charley Locke reports from her hometown of Oakland, California, where boomers are organizing against two proposals that would add 618 market-rate residential units to the city’s senior housing stock:
Many in the crowd had been marching against governmental and corporate overreach for half a century: against the Vietnam draft and the invasion of Iraq; against Wall Street; against police brutality. They’re part of a generational force that’s antiestablishment and suspicious of power. But in this fight, it wasn’t so clear who the establishment was or who had the power. Were these righteous middle-class activists fending off greedy developers who would charge high rents, or were they wealthy seniors prioritizing neighborhood character over ameliorating the housing crisis? Were they once again David, or had they become Goliath?
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