EU Moves to Give Cities More Power Over Airbnb and Holiday Rentals
European cities are set to gain greater flexibility to limit short-term rentals such as Airbnb under new plans aimed at reducing housing costs in popular tourist destinations, which the European Union is expected to unveil Wednesday.
The European Commission will outline the conditions under which local authorities can restrict short-term lets, as part of a broader affordable housing package designed to address what EU chief Ursula von der Leyen has described as a “social crisis.” In a speech last year, she highlighted the issue as a top priority for Brussels, saying, “Nurses, teachers, and firemen cannot afford to live where they serve. Students drop out because they cannot pay the rent. Young people delay starting families.”
While extremely popular among visitors, short-term rentals have drawn criticism from residents in many travel destinations, who say they reduce the availability of long-term rental housing and drive up local prices. From New York to Tokyo and Barcelona, a growing number of cities worldwide have introduced or considered restrictions on tourist accommodations in recent years. However, these measures have often faced legal challenges from rental providers and tourism operators, resulting in ongoing uncertainty.
The commission’s Affordable Housing Act aims to give cities firmer legal footing by clarifying when local authorities can take action without violating EU single market rules. According to a draft reviewed by AFP, cities and other relevant authorities will be permitted to limit holiday rentals, as well as property purchases intended for short-term letting, in areas considered to be under housing stress. The draft outlines several criteria for determining whether an area qualifies, including the relationship between local house prices and incomes, as well as broader population trends and future housing supply and demand. Any restrictions imposed would need to be non-discriminatory, necessary, and proportionate.
The proposed legislation would not apply to landlords renting out their own primary residence for short periods.
Housing affordability has become an increasingly pressing issue across the EU’s 27 member states in recent years. Property prices have risen 60 percent over the past decade, while rents have climbed 20 percent, leaving millions of people struggling to find affordable housing, according to Brussels. The EU attributes this primarily to insufficient housing supply, though it notes that short-term rentals add additional pressure in certain areas. Such rentals currently make up only about 1.2 percent of the EU’s total housing stock, but that share can climb as high as 20 percent in popular districts of some tourist destinations, according to EU data.
The draft acknowledges that holiday rentals “can generate important economic and social benefits, especially for households struggling to make ends meet,” while also noting they “may also aggravate housing demand pressures in some constrained local housing markets.”
Rental providers, however, dispute this framing. In a letter sent to the commission this month, tech industry group CCIA wrote that for the vast majority of cities, the claim that short-term rentals drive housing stress “does not survive contact with this evidence.” The letter pointed out that in some cities that have implemented restrictions, both rents and hotel prices have continued to rise, noting that Lisbon recently reversed some of the curbs it had previously introduced. An Airbnb spokesperson echoed this concern, stating that “Europe’s housing crisis needs structural solutions, and the implementation of this Act should focus on increasing the supply of homes.”
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