European Commission housing commissioner Dan Jørgensen announced on Wednesday that the Affordable Housing Act will not deliver cheap homes for every European, but will give cities a legal foothold to tackle short‑term rentals and empty dwellings in areas where housing stress is acute.

The legislation defines "housing stress" as a situation where local house prices and rents far outstrip average incomes. In such zones, municipalities will be able to justify measures against platforms that list holiday lets, second homes or properties left vacant for long periods.

Short‑term rentals under pressure

Tourist‑driven short‑term rentals have surged across the continent. Data compiled by the Commission shows listings on major platforms almost doubled between 2018 and 2024. In central Madrid, for example, there are roughly 40 short‑term rentals for every 100 long‑term contracts, a ratio that city officials say is distorting the market.

Local authorities have already begun to push back. Barcelona announced a blanket ban on short‑term rentals from 2028, while Amsterdam and Vienna have introduced area‑specific caps. Paris limits the number of nights a property can be let out on a short‑term basis. These measures have faced legal challenges; Florence's property owners and tourism groups lost a lawsuit over the city's clampdown in May, and Airbnb's appeal against a Spanish fine for illegal listings was rejected in March.

Jørgensen warned that essential public‑service workers, teachers, police officers and health‑care staff, are being priced out of the cities where short‑term rentals have proliferated. "If you want to listen to citizens who are worried, it is up to us to make sure internal‑market rules do not block cities from acting," he told reporters.

Limited scope of the new rules

Despite the political focus on holiday lets, they account for only about 1.2 % of the EU housing stock. A far larger issue is the prevalence of empty homes, roughly one in five dwellings sits unused, often as second‑homes in coastal or mountain regions.

Housing affordability has deteriorated sharply over the past decade. Across the EU, house prices have risen more than 60 % since 2015, with triple‑digit increases in Hungary, Estonia and Lithuania since 2010. Rents have climbed by an average of 20 %, but in the same three countries and in Ireland the rise is markedly higher.

Supply constraints lie at the heart of the problem. Construction activity fell sharply after the 2008 financial crisis and, according to Commission researchers, the EU will face a shortfall of seven million new homes by 2035. Meanwhile, social‑housing stock has slipped to just under 7 % of total dwellings, leaving low‑income households with fewer safety nets.

Income growth has not kept pace with price inflation. A recent Commission survey found that one in ten respondents sometimes struggle to pay rent or mortgage instalments on time, a figure that spikes among the poorest households.

What the Act can and cannot do

The Affordable Housing Act does not set price caps or direct subsidies. Its primary function is to remove legal obstacles that have previously prevented municipalities from regulating the short‑term rental market under EU internal‑market rules. By clarifying that such local measures are compatible with EU law, the Commission hopes to empower cities to act where housing stress is demonstrable.

Jørgensen admitted the plan is far from a panacea. "We are very well aware that this is not a silver bullet that will solve all problems in Europe," he said, noting that the ultimate impact will depend on how individual cities design and enforce their policies.

For European workers and families, the new framework offers a modest lever to curb the conversion of long‑term homes into tourist accommodation, but broader solutions, increased construction, stronger social‑housing programmes and measures to raise wages, will be needed to reverse the long‑term trend of unaffordable housing.