Europe is tightening the rules on short-term lettings. The European Commissioner for Housing, Dan Jorgensen, has officially presented the draft regulation, which aims to establish, for the first time, a common European framework for tourist lettings. This will give regions and local authorities the option to introduce restrictions in areas considered to be under housing pressure.
Areas under stress
The regulation, as set out in previews, sets a ratio of eight between average incomes and average property prices as a key indicator for assessing whether an area is subject to excessive housing stress and therefore requires the restrictions to be applied. The other criteria are historical parameters (the growth of this ratio over the past ten years) and projections for the future (the likelihood that this trend will be interrupted over the next three years). However, there is a new provision in the final text: if this ratio exceeds the threshold of ten, this alone is sufficient to justify the restrictions.
Limitations
In high-stress areas, restrictions on short-term lettings may be introduced. On this point, the regulations give local authorities and regional governments a free hand, without providing specific guidance. The reason is that the measures could vary significantly depending on the area. There could be bans on starting new short-term letting businesses. Alternatively, short-term lets could be capped at a maximum limit: a limit that might also apply to individual buildings. Furthermore, a cap could be set on the number of nights that can be let each year. Among the most politically contentious measures is the possibility of restricting the use or purchase of properties used for short-term lets.
Assurances for local authorities
The aim of the Commission’s measure is to provide regulatory certainty for local authorities that choose to impose restrictions within the framework of the European single market rules. To date, in fact, all Italian and European cities that have adopted these measures have faced appeals and challenges: the Tuscan regional law on short-term lets was even the subject of a challenge before the Constitutional Court (which the Region won). The President of the European Commission, Ursula von der Leyen, says: ‘A year ago, I promised to tackle the issue of housing affordability. Today, we are taking a step in this direction, bringing greater clarity and support to local authorities. The lack of affordable housing is a problem for many European citizens. Workers and students cannot afford to live where they work or study.”
The missing passages
This step, however, does not mark the end of the regulatory process. The European Commission’s proposal will now have to be scrutinised by the Parliament and the Council before a final text is agreed. The measure will, however, take the form of a regulation and, once adopted, will be directly applicable in the Member States.