The European Union has proposed a new plan that would allow cities to regulate short-term rentals, such as those offered by platforms like Airbnb, in an effort to help with the housing crisis. The proposal aims to give local governments the legal authority to limit these rentals in areas where housing is scarce, without facing potential legal challenges. The European Commission stressed that public authorities have a duty to act when the private market fails to provide affordable homes for residents. This proposal comes as cities around the world, including New York, Tokyo, Barcelona, and Paris, have introduced or promised restrictions on tourist rentals. However, in Europe, such measures are frequently challenged in court by platforms like Airbnb, which has made some local governments hesitant to act. The new proposal seeks to strengthen the legal position of local authorities by clearly outlining the conditions under which they can regulate short-term rentals without breaking the rules of the European single market. Under the proposal, cities could impose limits on vacation rentals and the purchase of property intended for short-term tourist use in areas that are "under housing pressure." These areas would be identified based on factors like the difference between real estate prices and residents' incomes. The future legislation will not apply to homeowners who occasionally rent out their primary residence for short periods, nor will it affect rules that have already been put in place by local governments before the legislation is finalized. Any regulation on short-term rentals must be fair, reasonable, and have a time limit, with a maximum duration of five years. The proposal will need to be negotiated with the European Parliament and member states before it can become law. Over the past 15 years, housing prices in Europe have gone up by 60%, and rental prices have risen by nearly 30%, largely due to a lack of new housing construction. In highly touristy areas, the rise of short-term rentals has made the housing crisis even worse. While short-term rentals make up about 1.2% of the European real estate stock overall, they can account for up to 20% in some popular tourist neighborhoods. Platforms like Airbnb have argued that short-term rentals are not the main cause of housing tensions and that the crisis requires long-term solutions focused on increasing the supply of housing. An Airbnb spokesperson stated that the idea that short-term rentals cause housing problems does not hold up to analysis. The CCIA, a group that represents online platforms, including Airbnb, pointed to Lisbon as an example, noting that rents have continued to rise in cities that have imposed restrictions, leading some to revise those restrictions.