Why is holiday rental in Europe becoming less attractive?

The days of unlimited holiday home rentals in Southern Europe seem numbered. More and more countries and cities are imposing stricter rules, from permits to approval from the owners' association. For investors, this means more uncertainty and lower returns. Where you used to simply buy a property and rent it out to tourists, you now first have to navigate a forest of conditions. In this article, we list the most important changes in Spain, Portugal and Greece. And we look at what they mean for your plan to buy a holiday home in Europe.

The picture is clear: European governments want to limit mass tourism and protect the housing market. They do this not only with new rules, but also by revoking existing permits or letting them lapse on sale. For you as a buyer, that is a risk you should not underestimate. Because you may buy a beautiful house, but not automatically the right to earn money from it. Below you can read what is happening in each country, and why many investors wonder whether Europe is still the right place.

Spain: first buy, then ask for permission

In Spain, holiday rental has been restricted for longer, but since last year a new hurdle has been added. If you buy a property in a community of owners (owners' association), as with many apartments in Estepona, you need approval from three fifths of the owners for tourist rental. That means you first buy the property, and only afterwards find out whether you may rent it to holidaymakers. That vote can take months, and the outcome is not guaranteed. Many buyers only realise after completion that their business plan is on shaky ground.

For existing landlords, the new rule often falls outside the scope: those who already had a permit may usually continue. But for new investors it is a different story. Moreover, the owners' association can make rules stricter than the law. So it is not only the government that decides, but also your neighbours. Without their approval, you cannot rent out profitably. That is why it is crucial to have in writing before the purchase what the owners' association permits. An estate agent who says it will be fine is not enough.

Portugal: 10,000 permits revoked in a year

Portugal has tightened the reins considerably. At the end of last year, more than 10,000 rental permits had been revoked, and in Lagos, in the Algarve, alone it concerned a quarter of all permits in that municipality. The reasons vary, but often it involves failure to comply with obligations, such as mandatory insurance. If you make a mistake, you immediately lose your permit. In addition, many permits are dormant: they still exist on paper, but the owner no longer actively rents out. The government is now clearing these up.

For investors, this means that buying a property with an existing permit offers no certainty. You must be able to demonstrate that you meet all conditions, and that can differ by municipality. Enforcement has become stricter. Moreover, the trend is clear: Portugal wants less tourist rental in certain areas, especially where pressure on the housing market is high. If you buy a house in the Algarve or Lisbon, you must take into account a government that actively enforces. A permit is not permanent property.

Greece: no new permits in Athens and Thessaloniki

In Greece, the situation is even stricter. In the centre of Athens and Thessaloniki, no new holiday rental permits may be issued since last year. The stop initially ran until the end of 2026, but the government has announced that it will continue until the end of 2027. Thessaloniki joined in July. If you now buy a property in these cities, you therefore cannot start tourist rental, even if the property is perfect for it. The government is also monitoring popular islands such as Santorini, where similar measures may follow.

An additional risk lies in the transfer. If an owner sells his property, the existing permit lapses. The new owner may not start again as long as the stop is in force. So you do buy the house, but not the right to rent it out. That has two consequences: you immediately miss rental income, and on resale a next buyer will also offer less because he has the same problem. This creates a downward spiral. Greece shows that even an existing permit is no guarantee for the future.

Europe and rental platforms will check data

Since May, the European Union also plays a role. Platforms such as Airbnb and Booking must check the registration of landlords and share data with the government. The EU does not ban holiday rental, but mainly wants visibility into who rents out and where. For you, that means more administration and less privacy. If your permit is not in order, the platform can block your listing or report your data. The monthly reporting obligation makes it almost impossible to rent out under the radar.

This measure applies to all member states, so also to Spain, Portugal and Greece. It makes holiday rental more transparent, but also more bureaucratic. Anyone who thought they could quickly rent out in a European country without a permit will be disappointed. The direction is clear: governments want control, and platforms must cooperate with that. For an investor, this means that you deal not only with local rules, but also with European reporting obligations. That is an extra layer of risk that you must price in in advance.

What this means for your purchase plans

The message is clear: Europe is wonderful for holidays, but as an investor you are entering a market that does not want to expand further. Rules are becoming stricter, not looser. Anyone who buys a holiday home today without reading the small print risks ending up with a property they may not rent out. Even if you plan to stay there yourself, that changes little about the value development. A house without a rental permit is worth less than a house with one.

That is why due diligence is more important than ever. Before purchase, check whether you may still rent out as a new owner, what the owners' association states in writing, and whether the permit remains valid after transfer. Do not be guided by stories from estate agents or sellers. If those certainties are missing, you had better look further. Perhaps at markets where the rules are more predictable and where investing in real estate is still encouraged. Compare your options, also outside Europe.