Lisbon: A home in the Portuguese capital swallows more years of local income than a home in almost any other city in the Union, and that ratio is about to acquire legal meaning. The Commission presented the Affordable Housing Act on 9 September, and executive vice-president Teresa Ribera framed it as a toolbox rather than a rulebook. The draft converts a familiar economic complaint into a threshold that public authorities can point at when they want to restrict short-term rentals.
The threshold reads like a piece of statistical plumbing. An area normally qualifies as under housing stress when an average home costs at least eight years of disposable income per head, when that ratio climbed over the previous decade, and when nothing on the horizon suggests the pressure eases within three years. Three conditions, all resting on figures that national statistical offices already publish. The Commission wrote the test so that a mayor in Porto and a mayor in Prague reach for the same arithmetic instead of the same rhetoric.
Why a definition matters more than a ban
Cities have restricted holiday lets for a decade and have collected lawsuits for their trouble. Amsterdam capped the nights a host may rent. Barcelona announced an end to tourist flats. Lisbon froze new licences across its historic core, then partly unfroze them when the courts and the coalition arithmetic shifted. Each measure started from a blank page, and each one invited an operator to argue that the city had exceeded what the Services Directive permits. The Court of Justice examined the Paris authorisation regime in 2020 and let it stand, but that ruling settled one national scheme rather than the question underneath it.
So the Act’s real contribution sits in its procedure. Before an authority restricts, it must show that short-term rental activity significantly damaged affordability or availability for at least three years, and that a lighter measure would not achieve the same result. Any restriction must aim at activity that pulls homes out of the long-term stock, particularly where the scale, frequency or commercial character of the letting aggravates the pressure. That is a proportionality test written into legislation rather than discovered in a courtroom five years later. Platforms read it the same way. Airbnb welcomed the direction and immediately asked for equivalent legal certainty for hosts, which tells you the industry expects the test to bind cities as much as it empowers them.
Critics of the approach make a reasonable point. A commercial operator running twelve flats through a letting company can restructure faster than a municipality can assemble three years of evidence, and the burden of proof falls entirely on the public side. Cities under acute pressure may find the paperwork slower than the market.
What the Act leaves untouched
Supply. The draft respects subsidiarity to the letter, so new construction, vacant property, social housing and planning permission all stay with member states, regions and municipalities. Short-term rentals matter at the margin in tourist districts and matter very little in the suburbs where most households actually look for a flat. Anyone expecting the Act to move national house price indices misreads what it does.
The Commission moved on the money side earlier and more quietly. Decision (EU) 2025/2630, adopted on 16 December 2025 alongside the European Affordable Housing Plan, widened the services of general economic interest exemption to cover affordable housing, not only social housing. Governments can now compensate providers without notifying Brussels and waiting for clearance. The decision defines affordable housing as housing for households that market outcomes leave unable to secure decent accommodation at affordable terms, a phrase broad enough to cover nurses and teachers rather than only the poorest tenants. It entered into force on 8 January 2026. From 1 January 2028, any aid above one million euro per undertaking must appear in a central register within twenty working days.
Put the two instruments together and the shape of Brussels housing policy becomes visible. The state aid change hands capitals a spending permission. The Act hands cities a defensible definition. Neither builds a single flat. The eight-year ratio diagnoses the illness with unusual precision and prescribes almost nothing, which leaves the interesting question for the co-legislators. Parliament and the Council will spend 2027 deciding whether a Union that can now measure housing stress accepts any responsibility for reducing it.
