European Commission drafts rules to cap short-term rentals in housing crisis zones
The European Commission has drafted the Affordable Housing Act, introducing uniform metrics that allow municipalities across the 27 member states to restrict tourist rentals and secondary home sales.
Criteria for housing stress zones
The European Commission is preparing to introduce a standardized mechanism allowing municipal and regional authorities across all 27 European Union member states to restrict tourist rentals in overheated property markets. According to draft text of the Affordable Housing Act scheduled for presentation on 9 September 2026 by Dan Jørgensen, the European Commissioner for Energy and Housing, local interventions will be tied to a uniform quantitative definition of housing stress. Under the draft provisions, an area qualifies as under housing stress if the average residential property transaction price is equal to or exceeds eight times the average annual disposable income of the local population.
In addition to the baseline price-to-income threshold of eight, public authorities must satisfy two further conditions. The price-to-income ratio must have increased over the preceding ten years, distinguishing structural high costs from recent price inflation. Furthermore, demographic dynamics, housing supply, and housing demand must indicate that the shortage is unlikely to subside within the subsequent three years. The draft empowers the Commission to adjust the baseline threshold of eight in the future through delegated acts.
- Draft text of the Affordable Housing Act regulation is reported
- European Commission schedules formal presentation of the regulation
Scope of restrictions on platforms and second homes
Once an area is formally designated as under housing stress, local and regional administrations obtain legal authority to introduce specific curbs on short-term holiday rentals on platforms such as Airbnb and Booking. These interventions apply exclusively to properties that are not the host's primary residence, such as dedicated tourist lets and secondary residences. Property owners who rent out accommodation within their own primary residence remain exempt from the curbs.
Beyond short-term rental quotas and night limits, the framework permits public bodies to restrict the purchase and use of residential land and properties not acquired for primary residency. In severe situations, municipal administrations can suspend new rental authorizations or enforce outright bans on tourist rentals in designated areas. However, public authorities must first assess whether less restrictive measures could achieve the same objective, and designations must be tailored to specific perimeters, such as individual neighbourhoods, rather than arbitrary citywide declarations.
Single market protections and industry reaction
The proposed regulation aims to resolve a persistent legal obstacle between municipal housing policies and European internal market principles. Local governments previously faced court challenges under the EU Services Directive when attempting to restrict short-term rentals, as short lets are classified under EU law as economic service activities. By establishing a harmonized European standard, the new framework provides municipalities with legal certainty against claims of single market distortion.
The draft text highlights housing pressures as an economic and social challenge for urban centres across the continent:
The European Union is facing a housing affordability crisis that weakens social cohesion and threatens the overall competitiveness of the Union.
Industry groups have expressed concern over the regulatory shift. The Italian Association of Short-term Rental Managers (Aigab) cautioned that restrictive measures could place millions of guest bed spaces at risk across the continent as European cities prepare to designate stressed areas.
