Housing Crisis
The European Commission wants to provide a legal framework for cities and national authorities in the areas most threatened by the housing crisis
The European Commission is paving the way to allow local governments to impose restrictions on second homes and short-term rentals in areas most threatened by the housing crisis sweeping the continent. The regulation does not prohibit second homes under any circumstances; rather, according to a draft proposal obtained by this newspaper, it would provide legal grounds for city councils and governments to limit the purchase of housing for this purpose in areas with severe housing shortages, provided they present evidence with data justifying the measure and demonstrating that there are no less restrictive alternatives to solve the problem.
This is the new Affordable Housing Act, which will be presented this Wednesday by the European Commission’s Executive Vice-President for a Clean and Competitive Transition, Teresa Ribera, and the Commissioner for Energy and Housing, Dan Jorgensen. If nothing changes in the draft, the EU proposal opens the door to placing limits on the purchase of new second homes—which would not affect those already owned—by creating a rigorous regulatory framework to ensure compliance with EU law. The regulation also allows local governments to adopt strict commercial restrictions on platforms such as Airbnb without fear of lengthy legal battles over violations of EU market freedoms.
Local governments will have to provide evidence of the negative effects of second homes
What Brussels explicitly establishes is the legal certainty that municipalities and regions need to intervene in areas where tourist rentals promoted by large platforms such as Airbnb or Booking are considered to be straining the market, and, for the first time, it provides the necessary legal framework for mayors and national authorities wishing to restrict the purchase of second homes. For example, to address situations in vacation destinations like Biarritz, where most homes are already second homes and residents cannot purchase homes for personal use.
However, according to the draft, in order to impose any restrictions on second homes, city councils or the relevant local authorities must be able to demonstrate with objective evidence that the purchase of homes for purposes other than primary residence has negatively impacted housing affordability in that area for at least the previous three years.
Another measure likely to spark controversy is the framework for limiting short-term rentals. However, the European Commission has drawn a red line by prohibiting in this draft any type of restriction on tourist rentals if they take place in the host’s own primary residence, as it considers this to be a legitimate source of financial support for many families. Conversely, for properties that are not the owner’s primary residence, local governments will be able to implement strict authorization schemes, registration requirements, or quantitative limits if they can demonstrate that the increase in tourist accommodations has had a real and verifiable negative impact on the traditional rental market for at least the past three years, just as in the case of second homes.
Furthermore, Brussels calls for proportional alternatives to be prioritized before taking such drastic steps. That is, less restrictive measures such as quantitative caps in high-demand areas, exemptions for cases of extreme hardship, or tax incentives. In any case, this is a way to provide legal cover for city councils and other local authorities that, in many cases, are involved in ongoing litigation with major platforms such as Airbnb or Booking.
EU sources explain that the proposals from the “Mayors for Housing” alliance have been given serious consideration, including Barcelona Mayor Jaume Collboni, who has demanded that Brussels provide greater legal protection and also define areas under housing stress to address this crisis. “The framework is heavily inspired by the mayors’ proposals,” sources in Brussels explain.
If approved in this form on Wednesday by Ursula von der Leyen’s College of Commissioners, the European proposal still has a long way to go. It requires the green light from the Council of the EU (the member states) and also from the European Parliament, where the right holds a majority in both institutions. Sources within the People’s Party have already expressed their outright rejection of the proposals to limit short-term rentals and second homes, which they believe would harm the local economy and destroy jobs.