Although short-term rentals are very popular among tourists, residents of many cities highly popular with tourists blame such rentals for locals losing the opportunity to rent apartments long-term, and rental prices rising.
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From New York to Tokyo and Barcelona – more and more cities worldwide have introduced or are considering introducing restrictions on tourist apartments in recent years. However, such restrictions are often followed by complaints from rental service providers and tour operators in courts, causing legal uncertainty.
In recent years, housing affordability has become an increasing problem in all 27 EU member states: 51% of residents in European cities surveyed last year indicated that it is an “urgent and pressing issue.”
According to Brussels data, over the past decade, real estate prices have jumped 60%, and rental prices by 20%, causing millions of people to struggle to find affordable housing.
According to EU data, between 2018 and 2024, “short-term rental activity” on four major rental platforms increased by 93%.
Proposed new act
Therefore, the European Commission (EC) on Wednesday proposed the Affordable Housing Act, aiming to help member states and cities address housing affordability and accessibility issues in areas under the greatest pressure, according to an EC statement.
“A year ago, I promised to tackle Europe’s housing affordability problem. Today, we take a step in that direction by providing more clarity and support to local authorities and communities, taking into account local realities. The lack of affordable housing concerns many of our European citizens. Workers and students cannot afford to live where they work and study. But most importantly, it is about fairness. Today, we deliver benefits to all Europeans,” said European Commission President Ursula von der Leyen.
In some cities and popular tourist destinations where housing pressure is greatest, increased use of housing for purposes other than primary residence can worsen local accessibility and affordability. The Affordable Housing Act responds to these highly localized concerns. It provides legal certainty to authorities when they decide to act according to EU law, considering local specificities.
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Some member states have already taken measures to reduce such pressure but faced legal difficulties regarding compatibility with EU law. The Affordable Housing Act ensures clarity and predictability, also taking into account requests from member states and municipalities to provide greater legal certainty on how they can act within the EU single market context.
The first common system
The Affordable Housing Act is the first common European system designed to assess housing-related measures affecting the single market. The decision on whether to act and what measures to take is made by competent authorities. Housing policy decisions remain national, regional, and local decisions.
The act aims to provide legal clarity to authorities when they decide to act under adverse housing conditions while protecting the single market and fully respecting the principle of subsidiarity.
The new rules aim to help competent authorities identify areas experiencing the most adverse housing conditions using a common methodology. When authorities decide to restrict housing use, for example, in the case of short-term rentals or vacant housing, they must prove that this contributes to local housing pressure and ensure that all measures are targeted, necessary, and proportionate.
Regarding short-term rentals, all measures must target activities that reduce the stock of housing available for long-term use, especially when their scale, frequency, or commercial nature increases housing pressure. Before imposing restrictions, authorities must also prove that short-term rental activity has had a significant negative impact on housing affordability or accessibility for at least three years and that less restrictive measures would not be equally effective. They must apply the EU short-term rental regulation and ensure its enforcement, including registration requirements and removal or cancellation of non-compliant listings, and, where possible, use data collected under that regulation to support their assessment.
Short-term rental is not the only form of non-primary housing use that can increase housing pressure. Authorities also take measures affecting the acquisition or use of residential real estate, for example, addressing the issue of second homes or long-term vacant housing. The Affordable Housing Act also establishes a clearer system for such actions. The act protects legal certainty and legitimate expectations: acquisition-related conditions cannot be applied retroactively, and appropriate transitional measures must be provided.
“Housing is primarily a place to live, a place to enjoy, feel safe, and ensure we can develop our abilities and strengths. Homes and apartments also have legitimate economic value, which explains why many people invest in real estate. However, we face a terrible crisis where many citizens cannot access housing. When the market fails to provide such an essential thing as affordable housing, authorities are responsible for taking action. With the Affordable Housing Act, we provide local authorities with legal certainty so they can act and address one of the greatest problems of our time,” said Executive Vice-President for a Green Deal, Fair Transition and Competition Teresa Ribera.
