The European Commission has proposed an Affordable Housing Act and an accompanying recommendation to help countries, regions and cities address the shortage of affordable homes. The proposal now enters the ordinary legislative procedure before the European Parliament and the Council.

One of the principal changes would be a common method for identifying ‘areas under housing stress’. The assessment would consider house prices and rents, household incomes, the availability of housing stock and other local data.

In such areas, competent authorities could consider measures related to short-term rentals, second homes or long-term vacant housing. Each measure would have to be evidence-based, targeted at a specific problem, necessary and proportionate. The proposal also provides for the protection of legitimate expectations and suitable transition periods.

For owners and investors in Croatia, concrete obligations will arise through the final EU text and future national or local measures. The proposal is particularly relevant to anyone whose investment depends on tourism or other short-term rentals.