A draft of the Affordable Housing Act would allow restrictions on holiday rentals and second-home purchases in areas facing housing stress, while protecting primary residences. Aigab warns that millions of tourist beds could be at risk.
Caps on the number of nights, bans on new holiday rentals, restrictions on how properties can be used and limits on second-home purchases could all become possible under a new European framework.
The European Commission is preparing legislation that could significantly expand the ability of national, regional and local authorities to intervene in areas where housing costs and shortages have reached critical levels.
The rules are contained in a draft of the Affordable Housing Act, the EU regulation that Energy and Housing Commissioner Dan Jørgensen is expected to present on September 9. The text is still subject to change. It is currently an internal draft prepared for consultation among Commission departments and has not yet been formally adopted as a legislative proposal.
The EU will not directly impose bans on short-term rentals. The regulation would, however, establish common criteria for the first time under which national and local authorities could introduce restrictions, making those measures easier to reconcile with the freedoms of the single market and potentially harder to challenge in court.
When does housing stress apply?
The first requirement is that the area concerned qualifies as a “housing-stressed area”. Under Article 6 of the draft, three conditions would have to be met simultaneously.
The average actual sale price of homes would have to be at least eight times the median disposable income of residents.
The ratio between house prices and incomes would also have to have increased compared with the previous 10 years.
Finally, based on demographic trends and the balance between housing supply and demand, the situation would have to be unlikely to improve over the following three years.
The Commission could later change the eight-times threshold through a delegated act if developments in the data warranted it. Authorities would have to base their assessments on data that is “objective, transparent and verifiable”.
A housing-stressed designation could cover a municipality, metropolitan area, urban agglomeration, neighbourhood or even a smaller part of a territory. The boundaries would have to be limited to what is strictly necessary. It would therefore not be enough to declare an entire city to be in a housing emergency if the problem is concentrated in only a handful of neighbourhoods.
What restrictions could be imposed?
In areas meeting these criteria, authorities could restrict access to and the supply of short-term rental services.
The regulation does not provide an exhaustive list of permitted measures. Its recitals refer, however, to licensing and registration requirements, planning or zoning restrictions, limits on the permitted use of properties, quantitative caps and geographical restrictions.
The broad wording does not rule out, in the most serious cases, suspending new licences or banning short-term rentals altogether in a particular area.
Before imposing an outright ban, however, authorities would have to establish whether the same objective could be achieved through a less restrictive measure.
Nor would it be enough simply to demonstrate that an area is under housing stress. To target short-term rentals, authorities would have to show, using verifiable data, that such rentals had negatively affected the availability or affordability of housing for at least the previous three years.
Measures would also have to be tailored to the types of activity most likely to remove properties from the long-term residential market because of their scale, frequency or commercial nature.
This could put professional operators managing multiple properties particularly in the spotlight, while offering greater protection to small-scale owners.
Primary homes would be protected
The regulation explicitly states that authorities would not be allowed to restrict short-term rentals carried out by owners in their primary residence.
Brussels argues that occasional rentals of a person’s main home do not permanently remove a property from the long-term rental market.
The protection would apply to the home where a person normally lives and has the centre of their interests, according to definitions established under national law.
This would be a mandatory minimum safeguard. Governments and municipalities could choose to exempt other categories of properties from restrictions as well.
Limits on second-home purchases
The second part of the regulation concerns the purchase and use of land and residential properties that are not intended to serve as the owner’s or another person’s primary residence.
The provision could therefore allow restrictions on second homes and property investment in areas facing the greatest housing pressures.
This would not amount to a general ban on sales. The draft would not prevent owners from selling their properties. Instead, it would allow authorities to impose conditions or restrictions on people purchasing or using homes for purposes other than primary residence.
Again, authorities would have to demonstrate that non-residential purchases and uses had negatively affected the housing market for at least three years.
The draft also calls for less intrusive measures to be considered before outright bans, including quantitative limits, safeguards for existing situations, exemptions to prevent disproportionate consequences and tax incentives.
The restrictions could not discriminate on the basis of nationality. Authorities would therefore not be allowed to prohibit foreigners from buying property while leaving purchases by domestic citizens unrestricted.
Measures would have to be reviewed every five years
Authorities would have to publish the analysis underpinning their decisions, the precise geographical boundaries involved and the duration of the measures.
Property owners and businesses would be able to challenge both the restrictions and the data and assessments used to justify them in court.
The measures would have to be reviewed at least every five years and withdrawn without delay once they were no longer necessary or proportionate.
For activities that had already been lawfully established, transitional arrangements would have to be introduced where necessary to protect legitimate expectations.
The regulation would not automatically apply to local measures adopted before it entered into force. Existing rules could remain in effect, although any renewal or amendment would have to comply with the new European framework.
The draft currently leaves the application date blank. Once the Commission presents its proposal, it would need to be approved by the European Parliament and the Council under the ordinary legislative procedure.
According to Aigab, final adoption is unlikely before 2028.
The issue of vacant homes
The Commission acknowledges that short-term rentals are not the structural cause of the housing crisis.
The underlying problem remains insufficient supply, alongside construction costs, limited land availability, lengthy permitting procedures, a lack of investment and the large number of unused properties.
The draft therefore says that restrictions on holiday rentals and second homes should be accompanied by measures to increase housing supply, bring vacant homes back onto the market, convert non-residential buildings and expand social housing.
The vacancy rate, however, is not among the binding conditions authorities would have to assess before imposing restrictions.
That is one of the points challenged by the Italian Association of Short-Term Rental Managers, Aigab.
Aigab raises concerns
“It would be more accurate to call this a regulation targeting short-term rentals,” says Marco Celani, president of Aigab.
The association fears that the European threshold could be particularly damaging for Italy, where declared incomes are relatively low and vary significantly between regions.
It should be noted that the draft refers to median disposable income among residents of an area, rather than average individual income for tax purposes.
There is nevertheless a question over whether sufficiently detailed data will be available to define neighbourhoods or historic city centres.
The European Mapadomo database, cited as a possible source but not mandated by the regulation, provides data at NUTS 3 level, which in Italy broadly corresponds to provinces.
More granular areas would therefore require national or local data, provided that the figures are verifiable.
Aigab also objects to the requirement that authorities merely demonstrate a “negative effect” from short-term rentals.
It argues that restrictions should require proof that short-term rentals are a “significant and predominant” factor compared with others, including vacant homes, a shortage of public housing, foreign investment and second homes.
According to the association, short-term rentals account for around 1.3% of Italy’s housing stock, while vacant properties number approximately 9.6 million out of a total of 25.2 million homes.
Aigab is calling for an assessment of vacant properties and the use of publicly owned housing to become mandatory before restrictions are imposed on private owners.
The association is also proposing that the house-price-to-income threshold be raised from eight to 12, that statistical sources be standardised and that professional property managers be explicitly recognised.
That, it argues, would prevent the reference to “commercial scale” from indiscriminately affecting registered operators holding Italy’s national identification code.
“Millions of tourist beds could be at risk”
Aigab estimates that more than half a million Italian families earn income from short-term rentals and warns that broad restrictions could put millions of tourist beds and arrivals at risk.
It also argues that such measures could encourage an expansion of the informal market and affect the wider ecosystem of property managers, cleaning companies, property services and software providers.
According to Celani, in destinations where the ability to generate rental income supports the value of second homes, restrictions could also put downward pressure on property prices.
The Commission itself acknowledges in the draft that restrictions may indirectly affect property values, financing conditions and investment.
The proposed regulation therefore does not automatically introduce a ban on short-term rentals or property sales.
But neither is it merely a statistical exercise.
It would create a European framework under which municipalities and national governments could impose potentially far-reaching restrictions.
The decisive battle is likely to centre on the data required to classify an area as housing-stressed and on the evidence linking holiday rentals and second homes to rising housing costs.
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