European Commission proposes new rules to regulate short-term home rentals

Airbnb and other companies providing short-term home rentals could face tighter restrictions after the European Commission proposed new rules on Wednesday to help tackle housing shortages in tourist hotspots.

A surge in short-term holiday rentals has contributed to a shortage of affordable housing and a spike in housing prices in many of Europe's most popular tourist destinations, prompting residents to protest in recent years.

What do we know about the EU's affordable housing proposal?

The EU's executive branch unveiled the measures as part of an "affordable housing" package, which will allow local authorities to limit short-term rentals to address what European Commission vice-president Teresa Ribera described as a "terrible crisis."

"When the market fails to deliver something as fundamental as an affordable home, public authorities have a responsibility to act," the Spanish politician said.

The measures seek to harmonize rules across the bloc, after attempts to crack down on Airbnb-style rentals by authorities in cities such as Paris, Berlin and Barcelona, among others, were met with legal challenges by rental and tourism companies.

The European Commission's Affordable Housing Act — which still needs to be approved by EU legislators and EU member states — would provide cities with legal support by clarifying when local authorities can act against housing companies without breaking EU single market rules.

Under the proposal, city and local authorities would be allowed to limit short-term and holiday rentals as well as curb the purchase of property for short-term letting in areas considered to be "under housing stress," the European Commission said.

For an area to be defined as "under stress," certain parameters — including the ratio between local housing prices and incomes — would have to be met.

Before restrictions can be introduced, cities would have to show that holiday rentals have had a major negative impact on the affordability or availability of housing for at least three years.

The proposed legislation will not impact landlords renting out their primary residence for short-term periods.

The Commission also recommended that authorities free up land for more housing and modernize planning and construction of new homes to address housing shortages.

How have rental companies reacted?

CCIA Europe, a lobbying group that represents Airbnb, among others, said the EU's measures fail to address the need for independent assessment of the restrictions.

"Europe will not solve its housing crisis by giving cities an EU framework to restrict short-term rentals and then letting them police their own compliance," CCIA's head of policy Alexandre Roure said in a statement.

"Without independent scrutiny or effective redress, this proposal will remain a paper tiger, leaving disproportionate restrictions in place and undermining the legal certainty the Affordable Housing Act is meant to provide," Roure added.