European Commission announced today the launch of an Affordable Housing Act aimed at curbing soaring rents and tackling homelessness across the bloc. The move comes after Eurostat data showed a 3 % increase in rents during the first quarter of 2026 compared with the same period last year, a trend that unions and social organisations say is pushing low‑paid workers into precarious living conditions.

The draft legislation, presented alongside a set of non‑binding recommendations, focuses on three main levers: restricting short‑term rentals in cities where the housing market is under pressure, encouraging energy‑efficient renovations, and mobilising public and private investment for low‑cost rental stock. While the Commission stopped short of mandating rent caps, it signalled that member states could consider such measures in national policy.

Short‑term rentals under scrutiny

One of the headline proposals is a regulation that would limit the conversion of long‑term homes into platforms such as Airbnb in municipalities identified as "housing‑stress zones". The idea draws on Slovenia's recent experience, where tighter rules on holiday lets have reportedly pushed a significant number of properties back onto the long‑term market and contributed to a modest fall in average rents.

European cities including Amsterdam, Berlin, Brussels, Barcelona and Florence have already introduced local limits on short‑term lets. In Amsterdam and Barcelona, the share of homes available for long‑term rent rose, yet rents have not yet shown a clear downward trajectory. Critics argue that without a coordinated EU‑wide framework, the impact of such measures remains fragmented.

Renovation, conversion and new construction

The Commission's recommendations also urge national authorities to promote energy‑efficient retrofits, extensions and conversions of existing buildings. By improving the quality of the housing stock, the EU hopes to reduce the need for costly new construction while meeting climate targets. Funding would be channelled through both EU‑level programmes and national schemes, with an emphasis on attracting private capital to complement public investment.

In parallel, the Act calls for the development of low‑cost rental and social housing. The proposal asks member states to set up dedicated funds, streamline planning procedures and, where possible, use vacant properties for affordable units. The EU estimates that around one million people across the continent are now homeless, a figure that has doubled in recent years according to NGOs such as the European Platform for Housing Rights.

Rent controls left out of the core text

Despite pressure from housing activists, the draft legislation does not embed mandatory rent controls. The Commission argues that rent regulation remains a national competence and that the effectiveness of caps varies widely. In Paris, a rent‑control scheme is credited with keeping rents about five percent lower than they would otherwise be, yet half of listings still exceed the ceiling. Sweden, by contrast, has seen rents climb despite a long‑standing rent‑control system.

Union representatives, however, contend that the omission signals a reluctance to confront the root causes of unaffordable housing. "We need decisive action on rent caps, not just voluntary recommendations," said Maria Rossi, spokesperson for the European Federation of Trade Unions. "Otherwise the burden continues to fall on workers whose wages have barely kept pace with price rises."

Housing ministries in several member states have welcomed the EU's focus on short‑term rentals but warned that any regulation must respect national legal frameworks. Belgium's housing minister, Johan De Vries, noted that Brussels already has flexible rules on excessive rents and that a one‑size‑fits‑all EU rule could clash with local market dynamics.

The human cost behind the numbers

Stories from the ground illustrate the urgency of the debate. In Greece, a primary‑school teacher transferred to a tourist‑heavy region was forced to live in a tent with her young daughter after her salary proved insufficient to cover the local rent. Similar cases have been reported in Spain, Italy and Portugal, where tourism‑driven price spikes outpace wage growth.

These personal accounts echo broader statistics: Eurostat's latest housing affordability index shows that in 12 EU countries, more than 20 % of households spend over 40 % of their disposable income on rent or mortgage payments. The trend is especially acute in capital cities and coastal hubs that attract both tourists and foreign investors.

What comes next?

The Affordable Housing Act will be debated in the European Parliament and the Council of Ministers over the coming months. If adopted, the regulation on short‑term rentals could enter into force as early as 2027, with member states required to designate "housing‑stress zones" and enforce compliance.

Meanwhile, NGOs are urging the Commission to add a clear clause on rent caps to the recommendation package, arguing that without price ceilings the market will continue to favour investors over tenants. The European Parliament's Committee on Regional Development has scheduled a hearing on the issue for October, inviting representatives from tenant unions, housing NGOs and the hospitality sector.

For workers and families across Europe, the outcome of these negotiations will determine whether the EU can translate its climate and social goals into tangible relief on the housing front. As rent levels keep rising, the pressure on national governments to act decisively is likely to intensify, with the EU's new framework providing both a catalyst and a benchmark for future policy.