European Union proposes framework to regulate short-term rentals

The European Commission has introduced a draft framework as part of an affordable housing plan to help cities manage short-term and vacation rentals. The proposal aims to establish a common methodology for identifying ‘areas of housing stress’—regions where the ratio of house prices to income, population dynamics, and supply-demand imbalances create significant pressure.

By defining these areas, the EU intends to allow local authorities to implement rental regulations without conflicting with existing EU competition and market rules. The plan specifically targets neighborhoods where short-term rentals have displaced residents, particularly in tourism-heavy cities. The proposed regulations will not apply to individuals renting out their own primary residences for short periods.

European Commission President Ursula von der Leyen stated that the initiative addresses the inability of essential workers and students to afford living near where they work and study. However, the plan faces criticism. Landlord groups and platforms like Airbnb argue that short-term rentals are not the primary driver of rising prices, noting that only about 1.2% of Europe’s housing stock is used for such purposes, though this figure exceeds 20% in some tourist hubs.

Once the draft is released, it will undergo a discussion period and requires approval from both the European Parliament and the EU Council before implementation.