The EU’s plan to make housing more affordable

BRUSSELS — The European Commission wants to make housing more affordable by squeezing more cash out of European Union funding programs and revising rules, according to a draft policy document seen by POLITICO.
Commission President Ursula von der Leyen has promised to deliver a housing plan, responding to political calls to address soaring costs. The document said the plan could come within the first 100 days of her mandate. For the first time, the Commission will also have a housing commissioner, Dan Jørgensen.
Europe is “suffering from a widespread housing crisis” as prices and rents climbed in the last decade with a “significant acceleration during the pandemic,” said the document. Construction and renovation are expected to fall by nearly 6 percent this year.
At the same time, housing is increasingly too expensive for young people in urban areas, it said, hampering labor shortages in key areas such as health and education.
“Housing affordability for prospective homeowners and renters is lower than a decade ago,” the document reads. “The increasing gap between housing costs and incomes has an adverse impact on the functioning of the labour market and undermines competitiveness.”
While the document acknowledges that most of the means to tackle the issue are in the hands of EU governments, it said the EU executive can make changes to EU policies and regulations to try and unlock solutions.
“A strategic and coordinated approach to face the housing crisis will drive reforms and investments,” it said. “If not addressed on time, the current housing crisis will impoverish more households and can potentially lead to higher expenditure in the long term, including on health and social care.”
The Commission suggests directing some of the EU’s massive €392 billion cohesion fund toward affordable housing.
“An immediate first step would be injecting liquidity into the market by allowing Member States to double the planned cohesion policy investment in affordable housing,” the document said.
However, it doesn’t define what affordable housing is and it has asked member countries to come forward with their definitions.
It lays out a number of potential ways to generate investment into housing, such as guarantees from the InvestEU program and an investment platform coordinated with the European Investment Bank. It also proposes measures to open up more spending on renovation, including a potential push for green mortgages.
It repeats that it will revise state aid rules as soon as next year to enable housing support measures, especially for energy-efficient and social housing. This answers a Dutch push to help lower-income essential workers such as teachers, nurses and police officers. 
The Commission will start a European Housing Alliance next year to identify investment needs, gather investment pledges and pool knowledge. It also suggests an annual summit to bring together builders, urban planning experts and an energy-efficiency financing coalition.
The plan includes formal guidance for how member states could “support house building and access to affordable and sustainable housing” via permits, urban planning and taxation.