EU Commission Proposes New Rules to Tackle Housing Affordability Crisis

On Wednesday 9 September 2026, the European Commission announced that it has proposed a new Affordable Housing Act aimed at supporting European Union (EU) Member States and cities, including Luxembourg, in addressing housing affordability and availability in areas facing the greatest pressure.

According to the Commission, the lack of affordable housing has become one of EU' most pressing concerns, with the latest Eurobarometer showing that more than 50% of people living in cities consider housing an immediate and urgent problem in their area. The Commission added that the housing crisis also affects European competitiveness by limiting labour and educational mobility. 

The Commission noted that in some cities and popular tourist destinations, the increasing use of housing for purposes other than primary residence can further affect local availability and affordability. The proposed Affordable Housing Act aims to provide public authorities with greater legal certainty when taking measures based on local circumstances and within EU law. 

Ursula von der Leyen, President of the European Commission, said: “A year ago, I promised to tackle Europe’s housing affordability. Today, we are taking one step in this direction. By providing more clarity and support to local authorities and communities, anchored in local realities. Lack of affordable housing is a matter of concern for so many of our European citizens. Essential workers and students cannot afford to live where they serve and study. But most importantly, it is about fairness. Today, we are delivering for all Europeans.”

The proposed legislation would establish the first common European framework for assessing housing-related measures affecting the Single Market. Decisions on whether to intervene and which measures to introduce would remain with the relevant authorities, with housing policy continuing to be determined at national, regional and local levels. 

Under the new rules, authorities would use a common methodology to identify “areas under housing stress”. If they choose to restrict certain uses of housing, such as short-term rentals or vacant properties, they would have to demonstrate their contribution to local housing pressures and ensure that measures are targeted, necessary and proportionate. 

For short-term rentals specifically, authorities would have to demonstrate that such activity has had a significant negative impact on housing affordability or availability for at least three years before introducing restrictions. They would also have to show that less restrictive measures would not be equally effective. The proposal also provides a framework for measures concerning second homes and properties left vacant for prolonged periods. 

The Commission said the aim was to ensure that local measures in areas facing housing pressure are better targeted, supported by evidence and reviewed over time, while also encouraging measures to increase housing supply. 

Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, said: “We are facing a terrible crisis that prevents many citizens from accessing housing. When the market fails to deliver something as fundamental as an affordable home, public authorities have a responsibility to act. With the Affordable Housing Act, we are providing legal certainty to local authorities, enabling them to take action and address one of the biggest problems of our time.”

The legislative proposal is accompanied by a Recommendation on housing affordability and supply in areas under housing stress. This aims to support authorities in increasing housing supply through measures including faster planning and permitting for new construction, renovation and the repurposing of buildings, as well as facilitating investment. Authorities are also encouraged to develop Housing Acceleration Plans. 

The Affordable Housing Act forms part of the European Affordable Housing Plan, alongside new State aid rules for affordable housing and the European Strategy for Housing Construction. It also complements EU rules on short-term rentals which have applied since May 2026. 

The legislative proposal will now be considered by the European Parliament (EP) and the Council under the ordinary legislative procedure. In parallel, the Commission will continue working with Member States and other stakeholders on the implementation of the European Affordable Housing Plan.