With the start of a newly approved 2024-2029 European Commission, noteworthy changes have been made to the portfolios of the Commissioners approved by Ursula von der Leyen under her second term at the institution’s helm.

The focus of this article is on the specific change to the Energy portfolio, which has now been renamed ‘Energy and Housing’ Commissioner, laid at the feet of Dan Jørgensen, the Danish candidate.

Why is it noteworthy, you may be wondering?

For starters, housing has never been deemed a competence of the European Union (EU), as acknowledged by partnerships focused on housing policy co-funded by the EU itself.

However, the reality afflicting European citizens has become too grave not to prompt action by European institutions. Indeed, according to Eurobarometer statistics, “housing costs exceeded 40% of the disposable income for 10.6% of urban and 7% of rural households”, reaching percentages as high as 31% in Greece and 23.3% in Denmark.

These statistics confirm the problem is shared by citizens across the EU’s countries and regions, but with potentially differing fundamental causes. As such, it’s no surprise that such crisis has surpassed local and national borders, arguably becoming part of the cultural European zeitgeist.

However, the consequences of this go beyond mere statistical citizenry unhappiness. 

A housing crisis not only reflects into economic competitiveness, delaying steps into adulthood and parenthood in an ever-aging continent, but it also provides a fertile ground for a growing European (far-right) populism.

The crisis was eventually picked up at the EU-level during Ursula von der Leyen’s October statement to the Plenary, where housing took centre stage with the promise to develop a “European Affordable Housing Plan” and support European citizens on this continental issue. 

The “why” indeed seems self-evident, but the vital question remains: how?

How, and to which extent, can the new Commissioner, in its revamped portfolio, address the European Housing Crisis?

To start off, one must remember the purpose of the European Commission – to be the executive arm of the EU, by proposing laws and policies (voted by the EU Parliament and the Council), creating rules for their implementation, all the while managing the EU budget, among many other responsibilities.

It’s with these responsibilities in mind that a deeper dive into the extent of the European Commission’s impact on European housing begins.

Financing & Investing

A first financing tool potentially being considered to alleviate housing costs is the Cohesion Fund, with an allocation of 42.6 billion euros for the 2021-2027 period, with the Commission said to be pondering the possibility of adapting the fund’s rules so that liquidity would be injected into the market, potentially doubling the Member States investment in affordable housing. However, even with such change, this requires said Member States to adapt their Partnership Agreements so that, similar to countries such as France, EU funding can support investments in social and/or affordable housing.

Another tool is the European Social Fund Plus (ESF+), dotted with a budget of 142.7 billion euros for the 2021-2027 period, which targets actions regarding employment, education & skills and, vital to the discussion at hand, social inclusion. The mission statement of the ESF+, under current rules, allows it to be used to fund housing of vulnerable socio-economic groups. 

The ESF+ has already been used to implement projects to support the housing initiatives of homeless people in Italy, the Czech Republic and France, as well as projects to support at-risk young people in Ireland and the Netherlands.

In addition to the plethora of tools at the Commission’s disposal, the European Regional Development Fund (ERDF) emerges—an instrument created to address imbalances between regions.

The ERDF already devotes around 8% of its budget to sustainable urban development. Such a tool can also include projects of urban regeneration that include the availability of affordable housing, having done with housing projects in the Czech Republic, Estonia, France, Germany, Hungary, Latvia, Lithuania and Poland, by renovating existing infrastructure.

However, despite several money levers being available to boost housing offering, some are conditionally under the control of close collaborating entities, such as the European Investment Bank (EIB), the lending arm of the European Bank. 

The EIB already has the mandate to finance and invest on housing across the European Union, specifically, affordable rental, social housing, student accommodation, care homes/assisted living, as well as other modalities, already counting on programs such as the InvestEu to do so, which enables the EIB to accept higher levels of risk when lending for projects focused on housing. 

For example, the EIB loaned €125m for the implementation of the Catalan (Spain) housing plan, and in 2010 and 2011, it supported the Flanders (Belgium) social housing activities. Between 2016 and 2023, the EIB also supported the Irish Housing Finance Agency with €650 million that resulted in 5,000 social and affordable housing units and 550 energy renovations.

Regulation and Legislation

Despite the fact that housing has been an area of action reserved for the national and local level, economic and monetary levers are not the only tools that the EU, and, specifically, the European Commission, have at their disposal to address the crisis. Indeed, EU law has and continues to meaningfully impact housing at the national level.

For instance, EU law covers:

• Harmonized EU rules around state aid and its conditions;
• What constitutes as state aid; and
• What is a service of general interest (SGEI), and in which circumstances Member States may invoke such service to support certain services.

The jurisprudence on EU law that created the SGEI concept has set strict limitations to what Member States can deem as social housing.

However, this jurisprudence has hindered the further enhancement of the social housing sector, creating confusion between members and uncertainty on what they can do without violating EU law regarding state aid on housing.

Conveniently, the European Parliament itself (supported by the European Economic and Social Committee (EESC)) has called for the modification of such rules, particularly to account for the different ways social housing is managed across countries.

As the Parliament seems open to approve changes these rules, the European Commission should take advantage of the opportunity to actually change them..

Another EU-level legal framework that impacts housing is the Energy Efficiency Directive, which requires Member States to implement rules on buildings’ energy efficiency.

As highlighted by the European Construction Industry Federation, adequately revisiting such directive could ensure that the same quality is maintained while still lowering costs enough so that they don’t become prohibitive for owners seeking to renovate and place further units on the market.

Initiatives and Tools

All that said, the European Commission’s tool kit isn’t limited to merely adjusting existing mechanisms. 

As the sole institution to propose legislation, it can also pioneer new initiatives to help Member States unlock housing affordability, one of the 20 essential principles of the EU Pillar of Social Rights.

One such initiative that has already been announced is the Pan-European Investment Platform for Accessible and Sustainable Housing, welcomed by the EESC and in partnership with the EIB, aimed at developing new manners through which public and private funds can be directed to housing projects.

Another tool in the Commission’s belt is the European Semester itself. 

The European Semester is part of the EU’s framework to coordinate socio-economic policy, executed every year, where the Commission is meant to:

• Analyze the yearly situation of Member states;
• Ensure compliance with EU rules;
• Ensure solid public finances; and
• Publish country-specific recommendations.

The European Semester can also be used to put housing policy and investment into higher focus, as lobbied by the Action Plan proposed by “The Housing Partnership”, and giving member states proposals on how to act with the Commission and EU’s took kit.

Additionally, further tools and mechanisms could be revamped and kickstarted, including the promotion of good practice-sharing between Member States regarding affordable housing policies, through programs such as SHAPE.

Simultaneously, connections could be created with local decision-makers and researchers to implement impact-monitoring systems on the ground, offering European institutions and Directorate Generals a better perspective on the impact of their actions across the continent’s housing ecosystem.

Obstacles

From this considerably brief analysis of the powers at the European Commission’s consideration, though the abundance of impactful ways to influence housing availability might have become clear, another perspective might have also emerged: bureaucratic slowness and disorganization. 

Indeed, the abundance of tools, initiatives and changes at the EU’s disposal risks the overlap of project scopes, under the potential control of differing entities and institutions.

So, while it is certain that the European Commission, and the new Housing Commissioner, can assist European citizens in their quest for affordable housing, it might reveal to be a complicated internal question on how to manage or where to increase budgets, especially with a more troubled European Parliament.

Reflections

As a young European citizen optimistic of the EU institutions’ intentions and political intervention, there is hope for better days regarding affordable housing, as the continent ages and elderly housing becomes a necessity to address spreading loneliness, while younger generations leave their parents at later ages.

In a troubled world, filled with struggles, an unequivocal right such as housing must become more of a standard across Europe, and less of an optional checkmark, much to Europeans’ chagrin. 

The European Commission has the tools to do so, the willingness to act has been displayed, and the action plans with relevant stakeholders already exist.

It is now time to see whether actual execution and successful implementation can be added to the Commission’s list.