EU Drafts Affordable Housing Act to Enable Local Limits on Short Term Rentals

The European Commission is preparing a new regulation called the Affordable Housing Act, which is expected to be presented on September 9. The draft establishes a common European framework that would allow national and local authorities to limit short term rentals and the acquisition of second homes in areas designated as being under housing stress. These measures are intended to safeguard the availability and affordability of housing. Under the proposed rules, an area is classified as under housing stress if the average home transaction price is eight times or more the average disposable income of the population, if this price to income ratio has increased over the last ten years, and if the situation is unlikely to improve within the next three years based on demographic and supply and demand data.

If an area meets these criteria, authorities may implement restrictions such as authorization requirements, quantitative caps, or bans on short term rentals for properties that are not the primary residence of the host. The regulation aims to provide a legal basis for these interventions, making them more compatible with the EU Services Directive and less susceptible to legal challenges regarding the freedom of the single market. The draft specifies that the perimeter of a housing stress zone should be limited to the strictly necessary area, such as a specific neighborhood rather than an entire city. In some cases, authorities may also restrict the use of land and residential properties not used as a primary residence. The final text remains subject to modification as it is currently in a phase of internal consultation.