The European Commission is preparing a new framework for short-term rentals, to give local authorities more room to act as housing comes under pressure and prices climb.
The European Commission is preparing a new legislative initiative that would give member states facing a serious housing problem more leeway to restrict short-term rentals.
Short-term rentals have become, in recent years, a field of intense legal confrontation between tourism operators and local authorities trying to ease pressure on the housing market. In many cases these disputes end up in court, where they can sit for years with an uncertain outcome.
The new European legislation, titled the “Affordable Housing Act,” is expected to set precise criteria under which cities and regions could take proportionate steps to deal with housing pressure, according to people familiar with the talks.
Although short-term rentals account for only 1.2% of the total number of homes in the European Union, the share is far higher in some especially popular tourist destinations.
As the Financial Times reports, in Sorrento in Italy, Dubrovnik in Croatia and Fuerteventura in the Canary Islands, for example, homes offered for tourist rental can make up as much as 20% of the total residential stock, according to data from the European Commission’s Joint Research Centre (JRC).
Local authorities argue that the spread of tourist rentals worsens the shortage of available housing and helps drive up prices for permanent residents. Short-term rental platforms dispute that assessment.
Restrictions put in place by countries over the years
Cities such as Amsterdam, Berlin, Brussels, Florence and Paris have already, in recent years, imposed a series of limits. The measures include, among other things, permit systems that cap how many properties can be offered for tourist rental, and ceilings on the number of nights an apartment may be let during a year.
Barcelona has gone further still, setting itself the goal of ending tourist apartment rentals altogether by 2028.
The measures draw reactions
Many of these measures have, however, prompted appeals from property owners and tourism operators, who argue that the restrictions breach the freedom to provide services guaranteed under European law.
“Whatever we do [to limit tourist rentals], an appeal follows,” said Jacopo Vicini, Florence’s city councillor for tourism.
Florence last year created a permit system for short-term rentals, while suspending new listings of properties in the city’s historic center. The measure prompted about a dozen appeals from owners and tourism operators.
The regional administrative court of Tuscany sided with the Florence municipality. That ruling is only a first instance of judicial review, which means further appeals remain possible.
Since then the city has extended the moratorium so that it covers 44% of its residential stock, and it expects further legal challenges.
Court decisions on this issue across the European Union are not uniform and, in several cases, remain unclear.
In a landmark 2020 ruling, the EU’s highest court found that local systems limiting short-term rentals were lawful when justified by a housing shortage, provided the measures taken were proportionate.
What exactly counts as a “proportionate” measure remains, however, a matter of legal interpretation and litigation.
As Lorène Derhy, a French lawyer specializing in property law, put it, cities thus find themselves in a situation of “recognised competence [but] permanent insecurity.”
That uncertainty can lead local authorities toward an overly cautious approach.
“Authorities that do not have the legal resources needed to lock down an ambitious plan restrict their own actions. They adopt rules that will not go as far as the law would allow, simply because they fear being taken to court,” Derhy noted.
Vicini, in Florence, stressed that it is “necessary” for the European Union to “recognise the possibility” for local administrations to impose restrictions on short-term rentals.
He also insisted that there cannot “be the same regulation for every city, because the situations are very different.”
The issue has become still more pressing as the cost of housing rises rapidly across the European Union.
According to Eurostat data, house prices rose by nearly two thirds between 2015 and 2025, while rents rose by more than a fifth over the same period.
In many member states, moreover, house prices have risen faster than household incomes, so that many young people find themselves effectively shut out of the property market.
The main cause of the housing crisis is seen as the shortfall in housing supply, which has failed to keep pace with demand. Planning restrictions also play a part, especially in densely populated urban areas.
A JRC study did, however, find a positive correlation between a strong presence of short-term rentals and higher housing costs. That relationship appears stronger over the long term for sale prices than for rents.
Platforms such as Airbnb reject, for their part, the idea that short-term rentals are a main cause of the housing shortage and point to the economic spillover that tourism generates for local economies.
Giorgos Mavros, Airbnb’s head of European government relations, said that “extremely strict restrictions on short-term rentals have very little chance of having a substantial effect on housing prices.”
“On the other hand, they have real and very concrete economic consequences in these cities,” he added.
Along similar lines, the European Holiday Home Association, a body that represents the sector, argued that even if short-term rentals “can play a role,” there are “clearly more significant problems.”
As a typical example, it noted that, on average, 20% of homes in the European Union remain vacant.
Source: Article365