Cities set to gain more power to curb short-term rentals

Cities across Europe may soon have firmer legal ground to restrict Airbnb-style rentals, as the European Commission prepares an Affordable Housing Act aimed at easing pressure in tourism hotspots. The proposal would allow local and regional authorities to limit holiday lets and purchases made specifically for short-term letting where housing markets meet defined stress criteria.

The commission is expected to present the package on Wednesday as part of a wider response to what Commission President Ursula von der Leyen has called a social crisis. Her warning is concrete: nurses, teachers and firefighters are struggling to live near their workplaces, while students and young families face rising housing costs.

The issue reaches beyond Brussels. Cities from Barcelona to Lisbon have introduced restrictions, only to face lawsuits from landlords, booking platforms and tourism businesses. The proposed EU framework would clarify when local measures comply with single market rules. That legal certainty could matter for Swiss cities watching the debate closely, even though Switzerland is outside the EU. Municipal authorities, housing groups and tourism operators will be assessing whether Brussels has found a workable balance between visitor demand and homes for permanent residents.

Short-term rentals occupy about 1.2% of the EU housing stock, but their concentration can reach 20% in popular tourist districts. That uneven distribution sits at the centre of the commission's case for giving cities more authority.

The proposed act would not impose one blanket European cap. Authorities would first need to identify areas experiencing housing stress. The draft refers to the relationship between property prices and local incomes, as well as population dynamics and expected housing supply and demand. Any restrictions would also have to be necessary, proportionate and non-discriminatory.

That approach could give local governments room to respond to very different markets. A city centre with a dense concentration of holiday flats faces a different challenge from a rural municipality with spare capacity and seasonal visitors. The figures also explain why national averages can obscure local pressure. Short lets make up a small share of housing across the bloc, yet can remove a substantial number of homes from the long-term market in particular neighbourhoods.

The commission says holiday rentals can provide income for households and support local economies. Its proposal recognises those benefits while giving authorities a way to act where housing supply cannot meet demand.

EU property prices have climbed 60% and rents 20% over the past decade, according to figures cited by Brussels. The commission attributes the main pressure to a shortage of homes, while warning that holiday rentals can intensify competition in markets already struggling to house their residents.

The proposed legislation would therefore target more than listings. In areas declared under housing stress, cities and other authorities could also limit the purchase of property for short-term letting. That could affect investors seeking apartments designed primarily for tourist occupancy rather than permanent homes.

The draft contains an important exemption. People who rent out their own primary residence for short periods would not be covered by the legislation. The distinction separates occasional home sharing from commercial operators managing multiple units, although implementation details will determine how easily authorities can enforce it.

Swiss cities face their own housing pressures and tourism patterns. Geneva, Zurich, Lausanne, Lucerne and mountain resorts operate under Swiss law, not the EU framework, but developments in neighbouring European markets could influence local political debates. They may also affect competition between hotels, serviced apartments and private hosts, particularly in destinations where visitor demand peaks during events, summer holidays or winter sports seasons.

Rental platforms and tourism groups are challenging the claim that short-term lets drive housing stress in most cities. The tech lobby CCIA told the commission that the argument does not withstand the available evidence. It also pointed to places where rents and hotel prices rose after restrictions were introduced, and cited Lisbon's decision to reverse some curbs.

Airbnb has taken a similar position. A company spokesperson said Europe needs structural solutions and urged policymakers to focus on increasing the supply of homes. The industry argues that regulating individual listings cannot solve a shortage created by years of inadequate construction and high demand.

The commission's draft acknowledges that holiday lets can bring economic and social benefits, especially for households that use occasional rentals to supplement their income. The dispute concerns scale and location. A spare room in a resident's main home presents a different policy problem from a portfolio of entire apartments marketed year-round to visitors.

Court challenges have made that distinction politically important. Cities want tools they can enforce, while operators want rules that do not shift with every local election. The proposed EU criteria are designed to reduce that uncertainty, but legal disputes are likely to continue wherever restrictions threaten established tourism revenue.

For Switzerland, the EU proposal is a signal rather than an automatic rule change. Swiss municipalities and cantons would not receive powers through the Affordable Housing Act, but they will be watching how Brussels defines housing stress and how courts interpret proportional restrictions.

The Swiss debate already involves competing priorities. Residents need access to long-term homes, landlords seek returns, hotels want fair competition, and tourist regions depend on visitor spending. A policy that works in a dense city may be poorly suited to an alpine resort with strongly seasonal demand. Local data will be essential if authorities consider tighter rules, including the number of entire homes used for holiday letting, vacancy rates, rent levels and the income of local households.

The commission's plan also puts housing supply at the centre of the discussion. Restricting short lets may release some apartments in highly concentrated districts, but construction, planning rules and transport links will determine whether workers can remain near jobs over time.

The next stage will be practical: defining stressed areas, protecting primary-residence hosts and testing restrictions against legal challenges. Swiss cities can follow that process closely while deciding whether their own housing markets require new measures or stronger enforcement of existing rules.