The European Commission has announced it will regulate short-term rentals and seek to curb speculation in the housing market, under the EU’s first-ever plan to tackle a shortage of affordable homes.
Housing is largely a matter for local and national authorities, but the issue has climbed up the EU agenda, as soaring rents and housing costs have priced out young people, key workers and families from many European cities.
Dan Jørgensen, the EU’s first commissioner for housing, said European democracy was at stake: “If we don’t solve this issue, we risk leaving a void that extremist political forces will take.”
Publishing a plan on Tuesday, the European Commission said it planned to draft legislation on the booming trade in short-term rentals via online platforms such as Airbnb and Booking.com by the end of 2026.
EU officials insist they do not intend to ban short-term holiday lets, but say local authorities need greater legal certainty about actions they can take to address the issue.
Barcelona, for example, faces a legal complaint from the association representing Airbnb and Expedia over a law to ban apartment rentals to tourists by 2028. The European Holiday Home Association argues the Catalan decree is “unjustified” and breaches EU law on the freedom to provide services.
In the wake of such legal challenges, Brussels officials say an EU law will enable local authorities to take “justified and proportionate measures” to control short-term holiday rentals.
Draft legislation, which will not be published until December 2026, could effectively propose a “white list” of options available to local authorities in areas of housing stress, such as caps on the number of nights a home can be rented out for short-term stays.
“We are not forcing cities or regions or member states to do these things but we are making it possible to solve these problems where they arise,” Jørgensen said.
The commission, the EU’s fiscal regulator, will also grant member states greater leeway to offer subsidies or incentives to finance affordable housing.
The plans to curb speculation are more open-ended. EU officials say they will analyse “housing price dynamics, including available evidence of speculation patterns” and seek to shed more light on property ownership.
The Socialist group in the European parliament welcomed the plan, which had been their key demand for supporting Ursula von der Leyen’s second term as commission president. The Socialists and Democrats (S&D), a diminished force in the more right-leaning parliament, who have recently lost key votes on deregulation, were quick to claim the affordable housing plan as a victory.
S&D leader Iratxe García Pérez described the plan as a “historic milestone” in response to a “social emergency” as she called for quick and ambitious implementation “with massive investments”.
But the plan also faced criticism for being no more than “a framework of intentions and future timelines”. Maria Ohisalo, a Finnish Green MEP, also said the plan lacked “a more decisive approach to real estate speculation, which plays a fundamental role in the housing crisis”.
The centre-right European People’s party housing spokesperson, Nikolina Brnjac, welcomed the emphasis on cutting red tape and accelerating housebuilding.
The commission – as part of a broader deregulation drive under the banner of “simplification” – has pledged to map EU rules to assess where they may be putting “unnecessary administrative burden” on small and medium-sized housebuilding companies.
Between 2010 and 2024, house prices increased by 53% across the EU, and rents by 25%, while general prices increased by 39%, according to Eurostat.
But the averages mask significant variations. Rents in Estonia surged by 208% over this period – with rises of 177% in Lithuania, 108% in Ireland and 107% in Hungary.
People in cities struggle most with unaffordability. Almost 10% of city dwellers lived in a household where total housing costs were more than 40% of disposable income in 2024, defined by Eurostat as “housing cost overburden rate”.
City dwellers in Greece (29%) and Denmark (23%) were the most likely to be burdened with such high housing costs.
The mayor of Barcelona, Jaume Colboni, told the Guardian this week that housing costs were akin to “a new pandemic” as he and 16 other city leaders urged the EU to help mobilise at least €300bn (£262bn) a year in public and private funds to promote the construction of affordable homes.
The EU is not following that call for an affordable housing fund modelled on the pandemic recovery scheme, which was financed by EU borrowing.
But officials pointed to an announcement from European public and regional banks on Tuesday promising a €375bn investment in social and affordable housing by 2029.
