EU to empower local governments to regulate short-term rentals amid housing crisis

Brussels is seeking to bring down housing costs in Europe’s most popular cities by giving local governments the tools to rein in Airbnb and other short-term rental operators.

As part of the European Commission’s Affordable Housing Act, due to be approved on Wednesday, EU-wide rules will determine whether an area is under housing stress, and national, regional and local authorities will be given legal backing to use targeted measures to ease home shortages.

“Short-term rentals are not the cause of Europe’s housing crisis,” Energy and Housing Commissioner Dan Jørgensen told POLITICO. “But it’s very clear that in some parts of Europe, especially in some of our biggest cities, they are aggravating the problem.”

While registered short-term rentals officially account for around only 1.2 percent of the bloc’s overall housing stock, they can make up as much as 20 percent of homes in tourist hotspots like Porto and major European cities.

According to consulting firm AirDNA, there were roughly 60,000 active short-term rental listings in Paris last year, while short-term rental listings accounted for nearly 40 percent of available rental stock in central Porto, and as much as 56 percent of the long-term rental stock in some Madrid neighborhoods.

“Where thousands of homes are taken out of the residential market in an already stressed city, we cannot pretend this has no effect on affordability and availability of homes,” Jørgensen said. “People should be able to afford to live and stay in the communities they call home.”

People before profit

Many cities are already attempting to tackle short-term rentals.

Barcelona plans to phase out its roughly 10,000 licensed tourist apartments by 2028, while Amsterdam, Florence and Paris have introduced licensing systems, rental caps or limits on new short-term lets.

But those efforts have often triggered legal action. Homeowners and tourism operators sued Florence over its restrictions, and Airbnb challenged a €64 million fine imposed by Spain after authorities determined the platform was carrying illegal listings. Although courts ruled in favor of the city governments, the lawsuits nevertheless tied up local authorities in costly, protracted court battles.

Jørgensen said the new legislation would “give the possibility to local authorities which want to take action, to do so in a way that is effective and that does not expose them to litigation risks.” The commissioner rejected industry allegations that restrictions could hurt tourism-dependent economies and homeowners who depend on rental income, insisting that “housing is a right, not just a commodity” and “people need to come before profit.”

He also dismissed industry claims that the Commission is overreaching by legislating on housing, an area where the EU has limited direct competence. Jørgensen pointed out that, under the new plans, national, regional and local authorities will determine which areas are under housing stress and decide whether and how to intervene.

“The goal is not to impose restrictions from Brussels,” he said. “But housing affordability is one of Europe’s most pressing challenges and European institutions cannot be blind to the very concrete daily problems our citizens are facing.”

“If we fail to address this crisis, we risk losing our people’s trust in democratic institutions,” he added. “And that would lead to the rise of extremist political forces.”

The legislation comes almost one year after Commission President Ursula von der Leyen described the EU’s housing shortage as a “social crisis” and pledged to take action.

Jørgensen said the new act represented a “key step to support cities, regions and countries that want to bring immediate solutions to the areas and the people most affected,” but stressed that it was not a panacea.

“The housing crisis is a complex issue,” he said, adding that the bloc still needed to “act on investment, simplification of rules, supply and pressures on the existing housing stock.”