EU Moves to Crack Down on Short-Term Rentals, Giving Housing-Stressed Areas Greater Scope for Restrictions
The European Union is stepping up its regulation of the short-term rental market, seeking to give cities and regions facing severe housing pressure greater scope to restrict the growth of short-term tourist accommodation where necessary.
On September 9, the European Commission presented a new policy proposal in Brussels aimed at establishing common criteria for identifying areas under significant housing pressure and determining whether short-term rentals are further contributing to housing shortages and rising housing costs.
For Portugal, the initiative is particularly relevant. As one of Europe’s major tourism destinations, high-demand areas such as Lisbon, Porto and the Algarve have seen rapid growth in short-term accommodation in recent years. The balance between local accommodation (Alojamento Local, or AL), tourism demand and long-term housing supply has consequently become an increasingly important issue in housing policy discussions.
However, the proposal does not mean that the EU intends to impose a blanket ban on short-term rentals through platforms such as Airbnb, nor will it require the Portuguese government or local authorities to introduce new restrictions.
Instead, the key change is to provide Member States and local authorities with a clearer legal basis for targeted intervention when they can demonstrate that short-term rentals are contributing to local housing problems.
Housing Pressure Will Be a Key Factor in Short-Term Rental Regulation
Under the current proposal, authorities would first need to establish whether a particular area is experiencing significant housing pressure.
The assessment could take into account several factors, including the relationship between local house prices and household incomes, changes in housing affordability over time, demographic trends, and the balance between housing supply and demand.
The existence of a housing shortage alone, however, would not automatically justify restrictions on short-term rentals.
Local authorities would also need to demonstrate a clear link between the expansion of short-term accommodation and local housing problems—for example, where large numbers of homes have been transferred from the long-term rental market to tourist accommodation, reducing residential supply or further increasing housing costs.
Any restrictions introduced would also need to be proportionate and tailored to local market conditions.
This suggests that the EU’s future approach to short-term rentals could become increasingly targeted, with particular attention given to cities where housing supply is limited, short-term rentals are highly concentrated and demand for long-term housing remains strong.
Commercial Short-Term Rentals and Primary Residences to Be Treated Differently
The proposal also seeks to distinguish between individuals occasionally renting out their primary residence and properties operated specifically as commercial short-term accommodation.
The European Commission recognizes that occasionally renting out a primary residence, or part of it, can provide households with additional income while having a relatively limited impact on long-term housing supply.
By contrast, when large numbers of residential properties are permanently removed from the conventional rental market and converted into commercial tourist accommodation, the impact on local housing supply and affordability can be considerably greater.
Future regulation may therefore focus more heavily on large-scale and commercially operated short-term accommodation, particularly in housing-stressed areas with a high concentration of tourist rentals, rather than applying the same restrictions to all forms of short-term letting.
European Housing Policy Places Greater Emphasis on Long-Term Housing Supply
The European Commission has also stressed that restricting short-term rentals alone will not solve Europe’s current housing shortage.
Short-term rental regulation will need to be combined with efforts to increase residential construction, renovate existing housing and simplify planning and licensing procedures. According to European Commission estimates, the EU needs to build more than two million new homes each year to meet current housing demand.
This policy direction also reflects a broader shift towards placing greater emphasis on the long-term residential function of housing.
With housing supply remaining limited in many European cities, preventing excessive numbers of homes from moving out of the long-term residential market and into short-term tourist accommodation—while simultaneously increasing new housing supply—is becoming an important part of efforts to improve housing affordability.
From a market perspective, long-term rentals provide a relatively stable source of housing and serve ongoing residential needs, making them increasingly important in cities experiencing significant housing pressure.
Short-Term Rental Market Enters a More Transparent Regulatory Phase
In addition to the latest proposal, the EU has already introduced separate rules aimed at increasing transparency in the short-term accommodation market.
The relevant regulation took effect on May 20 and requires short-term accommodation providers and online platforms to strengthen registration and data-sharing practices, giving public authorities a clearer picture of the number, distribution and activity of short-term rentals across different areas.
Short-term accommodation currently accounts for around one-quarter of all tourist accommodation in the EU.
Greater access to reliable data will also provide an important foundation for local authorities to determine whether short-term rentals are having a measurable impact on long-term housing supply.
What Does This Mean for Portugal’s Property Market?
For property owners and Alojamento Local operators in Portugal, the proposal does not introduce any immediate new nationwide restrictions.
It does not directly impose new rules on short-term rentals in Lisbon, the Algarve or other parts of Portugal, and existing local regulations will not automatically change as a result of the proposal.
However, if the new EU framework is ultimately adopted, the Portuguese government and local authorities could have a clearer legal basis for introducing targeted restrictions on short-term accommodation in areas facing significant housing pressure.
For Portugal’s residential property market, this also sends a broader long-term policy signal: while tourism demand remains strong, European housing policy is placing increasing emphasis on long-term housing supply, affordability and the genuine residential needs of local communities.
As short-term rental regulation becomes more targeted and Europe continues to promote new housing construction, the residential property market may increasingly place greater value on long-term demand, stable rental models and sustained demand driven by genuine housing needs.
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