A new proposal from the European Commission is drawing attention across Italy's property and tourism sectors. Known as the Affordable Housing Act, the initiative aims to provide local governments with a clearer legal framework for addressing housing shortages in areas where housing has become increasingly difficult for residents to afford.
Under the proposal, authorities could introduce measures affecting short-term rentals, second homes, vacant properties, and other housing uses if they can demonstrate that they are contributing to affordability and availability challenges. According to the Commission, the goal is to give cities and regions better tools to respond to housing pressures while ensuring that any restrictions remain evidence-based and proportionate. At the same time, it acknowledges that regulation alone cannot solve housing shortages and is encouraging greater investment in housing supply, urban regeneration, and the reuse of existing buildings.
Although the proposal is still in its early stages and is not expected to take effect before 2028, it has already sparked debate in Italy, where industry groups argue that the criteria used to identify housing stress could make it easier for many municipalities to justify restrictions, even in locations where short-term rentals represent only a small share of the housing market.
Why is it Generating Debate in Italy?
The controversy centers on how the proposal defines "housing stress."
Under the draft legislation, an area may qualify if the ratio between average house prices and residents' disposable income reaches 8 or more, has been rising over time, and shows little prospect of improvement. Once that threshold is met, municipalities could potentially introduce restrictions on short-term rentals and certain non-primary residential uses.
Some industry associations argue that this formula could disproportionately affect Italy. Because Italian income data is generally calculated on an individual rather than household basis, many tourist destinations and historic city centers could exceed the threshold regardless of the actual impact of vacation rentals on the local housing market. They also contend that the benchmark may overlook important local factors, placing cities with very different housing challenges under the same framework.
The European Commission, however, presents the Affordable Housing Act as a framework rather than a mandate. It does not automatically impose restrictions or require municipalities to take specific actions. Instead, it establishes common criteria to help authorities assess housing affordability challenges and determine whether intervention may be appropriate. Recognizing that housing pressures vary significantly across regions and even within cities, the Act aims to give local administrators tools to respond to issues such as rising housing costs, population loss, and reduced access to housing for workers and local communities.
What Could this Mean for Buyers and Investors?
For now, there are no immediate implications for property owners. The proposal must still go through the EU legislative process and, even if approved, any measures would need to be introduced locally and justified by specific market conditions.
That said, cities already grappling with housing affordability concerns, including Florence, Venice, Rome, Bologna, Naples, and Rimini, could find it easier to justify future limits on short-term rentals under a common European framework.
For international buyers, second-home owners, and property investors, the broader significance lies in the direction of policy rather than the proposal itself. Across Europe, policymakers are increasingly examining how housing is used in areas where demand from residents, visitors, and investors competes for a limited supply of homes.
It is also important to keep the proposal in perspective. Even if ultimately adopted, the Affordable Housing Act would not create blanket restrictions across Italy. For most buyers considering a home in Italy, whether as a primary residence, a second home, or a lifestyle investment, it should be viewed as an evolving policy discussion rather than an immediate concern.
Thinking about buying in Italy? Contact Dolce Living for expert guidance on the market, local regulations, and finding the right property for your needs.
