EU Proposal Gives Cities More Power Over Airbnb Rentals

The European Commission has proposed new rules that would give cities and local authorities across the European Union greater legal authority to restrict Airbnb and other short-term holiday rentals in areas facing severe housing pressure. The proposal forms part of the Commission’s Affordable Housing Act, a broader package intended to address shortages of affordable homes and rising property prices in popular tourist destinations. The Commission argues that the rapid growth of holiday rentals has reduced the supply of long-term housing and contributed to higher rents and purchase prices. Residents in cities and regions including Paris, Berlin, Barcelona and parts of Spain have protested against the effects of mass tourism and short-term letting. Previous attempts by local authorities to regulate such rentals have faced legal challenges from property-rental and tourism companies, prompting the Commission to clarify how cities can act without violating EU single-market rules. Under the proposed framework, authorities could limit short-term rentals and restrict the purchase of homes for holiday letting in areas officially designated as being “under housing stress.” This designation would rely on indicators such as the relationship between local housing prices and incomes. Cities would also need to demonstrate that holiday rentals had substantially harmed housing affordability or availability for at least three years before imposing restrictions. The rules would not apply to landlords who occasionally rent out their primary residences. The Commission also recommended making more land available for housing and modernizing planning and construction procedures. However, CCIA Europe, a lobbying group representing Airbnb and other companies, criticized the proposal for lacking independent oversight. Its policy chief, Alexandre Roure, argued that allowing cities to regulate and monitor themselves could produce disproportionate restrictions and leave companies without sufficient legal certainty. The legislation still requires approval from the European Parliament and EU member states.

The European Union has introduced a framework intended to support long-term rentals and improve housing affordability, particularly in cities where tourism and short-term rental platforms have reduced the supply of homes for residents. The plan, presented as part of the Commission’s affordable housing strategy, seeks to create clearer and more predictable rules for local authorities while leaving housing policy decisions primarily to national governments. Under the proposed framework, authorities would use a common methodology to identify “areas under housing stress.” If they decide to restrict the use of housing for purposes such as short-term rentals or leave properties vacant, they would need to demonstrate that the measures address local housing pressures and are targeted, necessary and proportionate. The Commission says intervention is needed because housing access has deteriorated across Europe. Half of European city dwellers reportedly consider housing an urgent problem. Between 2015 and 2025, house prices rose by 64.9% across European capitals, while rents increased by 21.8%. Rents now consume about 40% of household income for some residents, while middle-class families increasingly struggle to buy or rent without qualifying for social housing. Residents of Lisbon, Barcelona and Prague have blamed platforms such as Airbnb for removing homes from the long-term market and driving up prices. Although short-term rentals make up only 1.2% of the EU’s total housing stock, they can represent as much as 20% of housing in some tourist destinations. The Commission estimates that Europe needs more than two million new homes annually to address demand. Airbnb supports the goal of making housing more affordable but argues that the proposed Affordable Housing Act would not add homes to the long-term rental market and would instead create regulatory uncertainty for hosts. The plan must be negotiated and approved by the European Parliament and EU member states before taking effect.

The European Commission has proposed giving cities greater authority to restrict short-term rentals such as Airbnb in areas facing severe housing pressure. The measure forms part of the EU’s affordable housing package and is intended to respond to rising housing costs in popular tourist destinations. According to EU figures, short-term rental activity increased by 93% across four major platforms between 2018 and 2024. The Commission is particularly concerned about professional operators who manage multiple properties as holiday rentals, arguing that these businesses can reduce the supply of homes available for long-term residents and contribute to higher rents. Residents in Lisbon, Barcelona and Prague have made similar complaints, with some saying that housing pressures have forced locals to move elsewhere. The proposed rules would allow local authorities to target multi-property commercial operators, while protecting the ability of people to occasionally rent out their primary residence. Restrictions on short-term rentals and second homes would only be permitted where there is clear evidence of serious housing pressure. Commission Vice-President Teresa Ribera said public authorities have a responsibility to act when markets fail to provide affordable homes. EU data indicates that nearly 10% of city residents spend more than 40% of their disposable income on housing. However, the Commission acknowledges that regulating short-term rentals will not resolve Europe’s broader housing shortage. High construction and land costs, planning restrictions and lengthy permitting procedures are also limiting the supply of homes. Airbnb said the housing crisis requires structural solutions and urged authorities to focus on increasing housing supply. The proposal therefore combines targeted controls on short-term rentals with a broader recognition that Europe’s housing problems require long-term measures.

The European Commission has proposed an Affordable Housing Act intended to give European cities greater legal authority to restrict short-term holiday rentals, including properties listed on Airbnb. The proposal is part of a broader effort to address Europe’s housing crisis and reduce housing costs in areas heavily affected by tourism. Under the proposed framework, local authorities would receive clearer guidance on when they can limit short-term rentals without violating European Union single-market rules. The commission says this legal clarity is needed because cities that have introduced restrictions have frequently faced court challenges, creating uncertainty over whether their policies are lawful. Dan Jorgensen, the EU’s housing commissioner, said short-term rentals are “a part of the problem in many cities.” Residents in popular tourist destinations argue that holiday rentals remove apartments from the long-term housing market and contribute to rising rents and property prices. However, holiday-let providers dispute those claims and have resisted efforts to impose tighter controls. The issue affects cities across Europe and has parallels elsewhere. Municipalities in New York, Tokyo and Barcelona have either imposed restrictions or considered doing so in response to the growth of tourist accommodations. The proposed EU legislation would not automatically ban or restrict short lets, but would establish conditions under which local governments could act. The Affordable Housing Act still must be negotiated with the European Parliament and EU member states before it can take effect. If approved, it could provide cities with a stronger legal basis for regulating short-term rentals while allowing them to respond to local housing pressures in tourism hotspots.