EU Proposes More Restrictions for Airbnb, Holiday Rentals

European cities will be granted greater authority to regulate short-term rentals, such as Airbnb, to alleviate housing costs in popular tourist destinations, according to plans unveiled by the European Union. These measures are part of an affordable housing package designed to address what EU chief Ursula von der Leyen described as a social crisis, particularly affecting nurses, teachers, and firefighters who struggle to afford living in their service areas.

While short-term rentals benefit tourists, they are often criticized for taking away long-term rentals from locals and driving up property prices. Many cities worldwide, including New York, Tokyo, and Barcelona, have either implemented or considered restrictions on these accommodations to protect housing affordability. However, limitations have frequently faced legal challenges from rental providers and tourism operators, creating legal uncertainty.

The EU's Affordable Housing Act aims to offer cities legal protection, outlining when authorities can act without breaching EU single market rules. Cities can limit holiday rentals and property purchases for short-term letting in designated "under housing stress" areas based on criteria like house price to income ratios. Population dynamics, future housing supply and demand will also be considered, ensuring measures are non-discriminatory, necessary, and proportionate.

Landlords renting out their primary residences for short periods will remain unaffected. The legislation does not impact the majority of landlords who rent out their homes occasionally. Housing affordability has worsened in the European Union over the past decade, with property prices rising 60% and rents 20%. While short-term rentals constitute only 1.2% of the EU's housing stock, they can occupy up to 20% in popular tourist districts.

Despite their economic and social advantages, short-term rentals may exacerbate housing demand pressures in constrained local markets. However, rental providers dispute the claim that short-term rentals are the primary cause of housing stress in most cities. Some cities with restrictions have even seen an increase in rents and hotel prices, as noted by a tech lobby group.

Ultimately, addressing Europe's housing crisis requires structural solutions, including increasing housing supply, according to an Airbnb spokesperson.