Brussels Readies Clearer Rules for Cities to Curb Holiday Lets

Short-term holiday lets have become one of the most contested corners of Europe’s housing debate, and much of the fight has been settled in court rather than in council chambers. The European Commission now wants to change that. It is preparing legislation, referred to as the Affordable Housing Act, that would give cities and regions clear criteria for imposing proportionate limits on holiday rentals, according to people briefed on the discussions.

The goal is to lift local authorities out of a legal grey zone. For years, cities that tried to rein in platforms such as Airbnb have seen their rules challenged by landlords and tourism operators, who argue the restrictions breach the freedom to provide services protected under EU law. The disputes drag on, and the outcomes are far from certain.

A small share overall, a large share in the hotspots

Part of what makes the issue so charged is that the pressure is highly concentrated. Short-term rentals account for just 1.2 percent of all homes across the EU. In the destinations that feel the strain, the picture looks very different.

Location	Holiday lets as share of housing stock
Sorrento, Italy	Up to around 20 percent
Dubrovnik, Croatia	Up to around 20 percent
Fuerteventura, Canary Islands	Up to around 20 percent

The figures come from the European Commission’s Joint Research Centre. Local authorities argue this concentration worsens housing shortages and pushes up prices for residents. Rental platforms dispute the connection.

Cities have acted, and been sued

Faced with rising rents and shrinking supply, several cities moved first. Their approaches range from licensing systems that cap the number of tourist lets to limits on how many nights a single apartment can be rented.

City	Approach
Amsterdam	Night caps and licensing restrictions
Berlin	Restrictions on tourist lets
Brussels	Restrictions on tourist lets
Florence	Licensing plus a moratorium on new listings
Paris	Restrictions on short-term rentals
Barcelona	Aims to phase out tourist apartment rentals entirely by 2028

Many of these measures ended up in court. Florence offers the clearest illustration. The city created a licensing system for short-term rentals last year and placed a moratorium on new listings in its historic centre, then faced roughly a dozen appeals from homeowners and operators. Tuscany’s regional tribunal sided with the city, but that is only the first level of review, so more litigation is likely. Florence has since widened the moratorium to cover 44 percent of its housing stock and expects fresh challenges. As Jacopo Vicini, the councillor responsible for tourism in Florence, put it, whatever the city does to curb holiday rentals, an appeal follows.

The proportionality problem

The legal uncertainty traces back to a single unresolved word. In a landmark 2020 ruling, the EU’s top court upheld local schemes that restrict short-term rentals on housing-shortage grounds, provided the measures are proportionate. What proportionate actually means was left to be fought out case by case.

That gap has real consequences. Lorene Derhy, a property lawyer in France, describes cities as holding recognised competence but permanent insecurity. The caution it breeds can be self-defeating. Authorities that lack the legal firepower to defend an ambitious scheme often adopt weaker rules than the law would allow, simply to avoid a challenge. Vicini argues it is essential for the EU to recognise the ability of local administrations to act, while accepting that the same rulebook cannot fit every city, because the situations differ so widely.

The housing backdrop

The politics are driven by a decade of steep increases. Across the EU, house prices rose by almost two-thirds between 2015 and 2025, while rents climbed by more than a fifth, according to Eurostat. In many member states prices have outpaced household incomes and pushed younger buyers out of the market. The main driver is a supply shortfall, as construction has lagged demand under planning constraints, especially in dense urban areas. The Joint Research Centre also found a positive correlation between the prevalence of short-term lets and higher housing costs, with a stronger link to sale prices than to rents over the long run.

The industry pushes back

Platforms reject the idea that holiday lets are the cause of the housing squeeze. George Mavros, head of EU government affairs at Airbnb, argues that very stringent short-term rental restrictions are unlikely to move the needle on housing prices, while carrying a concrete economic cost for the cities that impose them. The European Holiday Home Association, an industry lobby, says short-term rentals may play a role but are not the biggest problem, pointing to an average empty-homes rate of about 20 percent across the EU.

What it means for operators

For professional operators, a clearer EU framework cuts both ways. Criteria that make city measures easier to defend in court also make them harder to overturn, so the era of winning breathing room through appeals may be closing. The practical response is to treat jurisdiction as a core part of portfolio risk: know where a market sits on the licensing and cap spectrum, keep registrations and records in order, and favour assets in places where the rules are stable and the demand is durable. The direction of travel is set. What the Affordable Housing Act would change is how much certainty, on both sides, comes with it.