The European Commission has unveiled plans to regulate short-term holiday rentals and rein in housing market speculation, marking the EU’s first coordinated effort to address the growing shortage of affordable homes across the bloc.
Although housing policy largely remains the responsibility of national and local governments, spiralling rents and property prices have pushed the issue to the top of the EU agenda, particularly as young people, key workers and families are increasingly priced out of major cities.
Dan Jørgensen, the EU’s first commissioner with responsibility for housing, warned that the crisis poses a threat to democratic stability, cautioning that failure to act could open the door to extremist political movements.
Regulation of Short-Term Rentals
Under proposals published on Tuesday, the European Commission confirmed it intends to draft new legislation by the end of 2026 targeting the rapidly expanding short-term rental sector, including platforms such as Airbnb and Booking.com.
EU officials stressed the aim is not to ban holiday lets, but to provide local authorities with clearer legal powers to manage their impact in areas experiencing acute housing pressure.
The move follows legal challenges in several cities, including Barcelona, where local authorities face opposition from industry groups over plans to restrict tourist apartment rentals.
Brussels says EU-wide legislation would allow municipalities to introduce “justified and proportionate measures” without breaching internal market rules.
Draft proposals, expected in December 2026, could include options such as limits on the number of nights a property can be rented for short-term stays.
Addressing Speculation and Housing Supply
Alongside rental regulation, the Commission said it would give member states greater flexibility under EU fiscal rules to subsidise and incentivise affordable housing development.
Measures to curb property speculation remain less defined, with officials committing to further analysis of housing price dynamics, ownership patterns and speculative activity.
As part of a broader drive to boost supply, the Commission will also review existing EU rules to identify administrative burdens that may be slowing housebuilding, particularly for smaller developers.
Political Reaction and Cost Pressures
The proposals were welcomed by the Socialist and Democrats group in the European Parliament, which described the plan as a major step in responding to what it called a social emergency.
However, critics argued the initiative lacks urgency, warning that it sets out intentions without firm timelines for tackling speculation.
The centre-right European People’s Party backed the emphasis on cutting red tape and accelerating construction.
The announcement comes amid sharp rises in housing costs across the EU. Eurostat figures show house prices rose by 53 per cent between 2010 and 2024, while rents increased by 25 per cent, with far steeper rises recorded in countries such as Ireland and the Baltic states.
Urban residents remain the most affected, with nearly one in 10 city dwellers spending more than 40 per cent of their disposable income on housing.
While the Commission has ruled out creating a dedicated EU housing fund, officials pointed to a commitment by European public and regional banks to invest €375bn in social and affordable housing by 2029.
