European housing crisis sparks debate over short-term rental regulations

The European Commission has introduced the Affordable Housing Act as part of a broader European affordable housing plan to address rising housing costs. The proposed regulation aims to provide mayors with legal certainty to intervene in short-term rentals and secondary homes within areas identified as being under 'housing stress.' An area is classified as under stress if average house prices are at least eight times the annual per capita income and the tension does not subside naturally within three years.

In Italy, the Constitutional Court recently annulled two articles of a regional law regarding short-term rentals. Industry representatives, such as Property Managers Italia, argued that the regional law—which reclassified short-term rentals as strictly tourist use—had reduced housing supply in cities like Rimini by over 10% in 2026. They contend that short-term rentals account for only 0.62% of total housing in Rimini, suggesting that local authorities are targeting the wrong sector to solve structural housing shortages.

Experts remain divided on the European proposal. Some academics warn that measures must be proportionate and that a direct link between short-term rentals and housing shortages must be proven, while others suggest the act could help better allocate existing unoccupied properties rather than requiring new construction.