European Commission commissioner for housing Dan Jørgensen announced this week the launch of an Affordable Housing Act that is intended to give cities a clearer legal basis to tackle short‑term rentals, second homes and empty dwellings in areas where housing stress is evident.

What the new rules cover

The legislation does not promise cheap homes for every European, a point Jørgensen stressed in a press briefing. Instead, it defines "housing stress" as a situation where local house prices and rents far outpace average incomes, allowing municipalities to justify measures such as limiting the number of platforms' listings, imposing vacancy taxes or restricting the conversion of long‑term rentals into tourist accommodation.

Data supplied by the Commission show that short‑term rentals on major platforms have almost doubled between 2018 and 2024. In central Madrid, for example, there are roughly 40 tourist‑oriented units compared with 100 long‑term contracts, illustrating the scale of the shift in demand.

Local responses and legal battles

Several cities have already moved to curb the boom. Barcelona plans a total ban on short‑term rentals from 2028, while Amsterdam and Vienna have introduced area‑specific limits. Paris caps the number of nights a property may be let out to tourists. These initiatives have often been challenged in court. In May, property owners and tourism groups in Florence lost a lawsuit against the city's restrictions, and in March Airbnb's appeal against a Spanish fine for illegal listings was rejected.

Jørgensen argued that essential public‑service workers, teachers, police officers and health staff, are being squeezed out of the market in cities where tourist rentals have proliferated. He said the EU's role is to ensure that internal‑market rules do not block municipalities from responding to citizens' concerns.

Why the impact may be limited

Short‑term rentals account for only about 1.2 % of the EU housing stock, while one in five homes sit empty, often as holiday properties. The broader affordability crisis is driven by a sustained rise in prices: across the EU, house values have climbed more than 60 % since 2015, with triple‑digit increases in Hungary, Estonia and Lithuania since 2010. Rents have risen on average by 20 %, and by far more in the same three countries and in Ireland.

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. At the same time, incomes have not kept pace with price growth, leaving a tenth of households reporting difficulty paying rent or mortgage on time.

The decline in social housing exacerbates inequality. Public‑sector stock now makes up just under 7 % of total housing, down from higher levels in previous decades, meaning low‑income families have fewer safety‑net options.

Outlook and next steps

Jørgensen acknowledged that the Affordable Housing Act is not a panacea. Because implementation rests with individual cities, the Commission cannot predict how much prices will fall or how many homes will become available. "We are very well aware that this is not a silver bullet that will solve all problems in Europe," he said.

Nevertheless, the new framework could provide a legal shield for municipalities that wish to pursue stricter controls on tourist rentals and vacant properties, potentially easing pressure on local housing markets. Whether this will translate into measurable relief for renters and essential workers remains to be seen, and will depend on how aggressively cities use the tools now at their disposal.