The EU has drafted new rules which could lead to more restrictions for Airbnb and other short-term home rental companies.
The proposal, which will require agreement from EU countries and the European Parliament in the coming months before it passes into law, would provide the first common European framework for assessing new housing measures.
Increases in short-term holiday rentals have long been linked with shortages of affordable housing, with protests staged across Europe.
Authorities in cities such as Paris, Barcelona and Venice have already introduced measures to crack down on Airbnb, which have triggered various legal challenges.
The new proposal puts forward a "common union approach for determining whether an area is under housing stress".
Authorities could pinpoint areas with housing pressures by determining if the price-to-income level is high, or if there has been an upward trend in demand over the past decade.
It calls on authorities to target short-term lets most likely to have an adverse effect on the availability and affordability of long-term housing, including those "characterised by their commercial scale".
The commission said any subsequent restrictions against short-term rentals must be evidence-based, limited to the affected areas, and not retroactive.
European Commission President Ursula von der Leyen 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."
Shares of Airbnb were down around 3% during morning trade.
The company said the main issue is the short supply of housing.
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George Mavros, Airbnb's head of government affairs for the European Union, said: "That means focusing it (the regulation) where the shortage actually is: construction, renovation, and the homes standing empty across Europe today."
The head of policy for the Computer & Communications Industry Association (CCIA Europe), Alexandre Roure, also criticised the proposal to let cities oversee their own compliance.
He said: "Without independent scrutiny or effective redress, this proposal will remain a paper tiger, leaving disproportionate restrictions in place and undermining the legal certainty the Affordable Housing Act is meant to provide."
(c) Sky News 2026: Airbnb faces potential new restrictions as EU proposes clampdown on holiday rentals
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