New EU rules to help municipalities alleviate housing crisis

TALLINN - The European Commission on Wednesday presented a proposal to help member states and local authorities increase the availability of affordable housing in the most pressured areas.

According to a recent Eurobarometer survey, over half of urban residents consider the availability of affordable housing in their area a major concern. In some cities and popular tourist destinations, housing is increasingly used for purposes other than as a primary residence, making affordable housing progressively more inaccessible for locals.

The Affordable Housing Regulation will provide legal certainty for public authorities deciding to take action to increase housing availability within the framework of EU law. While some member states have already imposed restrictions to alleviate their housing crises, they have faced compliance issues with EU law. The new regulation introduces clarity and predictability, addressing the call from member states and municipalities for greater legal certainty.

European Commission President Ursula von der Leyen said: "A year ago, I promised to tackle housing affordability in Europe. Today, we take a step in that direction. We are offering greater clarity and support to local authorities and communities, taking local circumstances into account. The lack of affordable housing is a concern for a great many European citizens. Essential workers and students cannot afford to live where they work and study. Moreover, this is a question of fairness. Today, we are acting for all Europeans."

The proposal establishes a European-level framework for assessing housing measures that affect the single market. The decision on whether to act and what measures to implement will be made by the competent authority, leaving housing policy choices to national, regional, and local authorities.

The new rules are designed to help authorities identify pressured areas using a common methodology. If authorities decide to restrict housing for certain uses, such as for short-term rentals or in cases of vacant properties, they must prove that such use exacerbates pressure on housing availability and ensure that any measures are targeted, necessary, and proportionate.

For short-term rentals, any measure must primarily target activities that reduce the housing stock available for long-term use, particularly when the scale, frequency, or commercial nature of such activities increases pressure on housing availability.

Before imposing restrictions, authorities must also prove that short-term rental activities have had a significant adverse effect on housing affordability or availability for at least three years and that less restrictive measures would not be equally effective.

Short-term rentals are not the only form of non-primary housing use that can intensify housing pressure. The Affordable Housing Regulation also provides a clearer framework for measures concerning the acquisition or use of residential property, such as second-home ownership or long-term vacancies.

The proposal protects legal certainty and legitimate expectations: conditions related to acquisition cannot be applied retroactively, an appropriate transitional regime must be established, and in the case of long-term vacant housing, justified periods of non-occupancy must be considered.

In pressured areas, the goal is for local-level measures to be better targeted, evidence-based, and up-to-date, thereby helping to increase the housing supply. The proposal also offers greater legal clarity for investors and property owners operating across multiple local markets.

The proposal will now be discussed by the European Parliament and the Council.