The Affordable Housing Plan will increase European added value in jointly addressing the housing crisis.
Housing affordability is not only a question of rent or house prices. It's also related to heating costs, energy prices, and other factors linked to someone's living situation, which can be measured by the housing cost overburden rate. This also means that measures must take several policies into consideration, to avoid improvements in one area that cause price hikes in others.
Get an overview of what the EU already does in the area of housing, and how we plan to shift gears.
The EU mobilises substantial funding for housing, and the Commission plans to further boost public and private investment into housing. the European Commission has developed an operational toolkit on the use of EU funds for investments in social housing and associated services, which can help the relevant actors in the Member States to leverage EU funding for social and affordable housing.
The Recovery and Resilience Facility supports significant investments and reforms in housing across Member States. Overall, total estimated expenditure for social housing and other social infrastructure amounts to more than 22 billion euro, and the overall estimated investment stimulus in the area of energy efficiency renovations of buildings or construction of new energy efficient buildings is around 85 billion euro.
The Commission has put forward a proposal to double the amount of cohesion policy funding dedicated to affordable housing. Member States will also be able to leverage private and public financing by using a new financial instrument set up jointly with the European Investment Bank (EIB). The instrument will combine cohesion funding with the resources of the EIB and of other international financial institutions as well as national promotional and commercial banks. Member States are invited to accelerate and streamline permitting and planning rules at local and city level to speed up the delivery of affordable housing solutions. O the Cohesion open data platform there's an overview of how cohesion policy supports housing.
There are other important funding streams such as InvestEU, LIFE and Horizon Europe. And the new Social Climate Fund will contribute to a socially fair climate transition, supporting vulnerable households with investments on energy efficiency and decarbonizing heating and cooling systems.
The ESF+ finances a number of activities related to housing including but not limited to upskilling of service providers working with homeless people, providing people with counselling to tackle indebtedness, and support for housing retention schemes and actions to improve living conditions.
The Commission and the European Investment Bank (EIB) Group are partnering with Europe's national promotional banks (NPBs) and international financial institutions (IFIs) to develop a new pan-European investment platform for affordable and sustainable housing. The platform will be a one-stop-shop portal to provide advice and finance to support innovation in the construction sector, build affordable homes and invest in energy efficiency and the renovation of housing stock across Europe.
The Commission will continue to help mobilise private investment to make housing more sustainable and energy efficient, for example in the Energy Efficiency Financing Coalition to draw in private capital.
EU State aid rules allow Member States to support services of general economic interest (SGEI) like public transport, universal postal services, health services - and social housing for disadvantaged people. While the so-called SGEI Decision allow Member States to grant support to social housing without notification and without any compensation limit, they do not mention affordable housing for middle-income households.
In principle the SGEI Decision could also cover affordable housing SGEIs, but affordable housing is not defined in the SGEI Decision, making the design of affordable housing SGEIs difficult for Member States, and to the extent that these SGEIs would go beyond the scope of social housing, compensation under the SGEI Decision could not exceed 15 million euro per year which is insufficient to address existing needs.
Beyond 15 million euro per year, affordable housing SGEIs could be subsidised under the so-called SGEI Framework, subject to prior notification and Commission approval. Besides the difficulty of designing affordable housing SGEIs and the need to notify the related measures, the SGEI Framework has more stringent compatibility conditions than the SGEI Decision, particularly for the verification of the absence of overcompensation which explains why Member States do not use it for that purpose.
In light of this, State aid for affordable housing measures has been approved by the Commission in a few cases directly under Article 107(3)(c) TFEU, following an assessment to verify whether the positive effects of the aid on competition outweigh its negative effects. The Commission approved three schemes in this way in recent years, concerning Sweden (SA.56305), Ireland (SA.102927) and Czechia (SA.106249). However, such decisions require a notification and a case-by-case assessment, which makes such approach unfit for a generalised application.
Against this background and following calls from Member States and stakeholders, the Commission will revise the SGEI rules to offer more flexibility and clarity to Member States to support affordable housing.
As part of this revision, the Commission plans to introduce a new category of “affordable housing” in the SGEI Decision. It will also reflect on the minimum conditions necessary to define and compensate proper affordable housing. The revision will aim to avoid undue distortions in the commercial housing market as well as avoid a detrimental effect on social housing, which supports the more vulnerable parts of the population.
The Commission is developing a European Strategy on Housing Construction focusing on the supply side. It is looking at how to increase the productivity and competitiveness of the entire construction value chain by exploring all relevant aspects for it to reach its full potential: the complexity of land use and permitting requirements and the length of related administrative procedures, access to material inputs including recycled materials and construction waste, more technological innovation in building methods and materials, digitalised processes, obstacles in cross-border provision of services, and the acute lack of skilled labour.
The strategy will build on the new Construction Products Regulation, which will harmonise construction products across the EU Single Market, supports innovative construction techniques and enhances the sector’s competitiveness and sustainability. The new Regulation will create the conditions to allow the EU to champion innovative and sustainable techniques including prefabricated or modular elements such as façade systems. Increasing the use of offsite construction methods will reduce costs and accelerate the delivery of much-needed housing, both newly built and renovated. Such technologies can lead to a 10-15% reduction in construction waste during the production and manufacturing phases and a 20-60% reduction in construction time. Additionally, prefabricated units can be disassembled and reconfigured for repurposing at the end of their life cycle, further enhancing sustainability benefits.
The construction and renovation sector can already draw on the European framework for sustainable buildings, called Level(s). The framework allows easy access to best practices for making buildings that are suitable for the future.
To address the skills and labour shortages in the construction sector, the Union of Skills supports Member States in scaling up the construction of residential buildings where needed by providing qualified workers.
New European Bauhaus (NEB) is a policy and funding initiative that makes green transition in built environments enjoyable, attractive and convenient for all. Even the smallest communities on the ground deserve living spaces that improve their well-being and sense of belonging. The initiative promotes solutions that are not only sustainable, but also inclusive and beautiful, while respecting the diversity of places, traditions, and cultures in Europe and beyond.
The EU Affordable Housing Initiative works to make sure social and affordable housing facilities also benefit from the renovation wave. It pilots 100 lighthouse renovation and construction districts with a smart neighbourhood approach, mobilises cross-sectoral project partnerships and links them to local actors, and promotes efficient access and use of innovative processes such as circular and modular building, production of renewable energy as well as engagement models to empower residents and local communities.
The Commission is addressing concerns regarding short-stays booked via online platforms, which have experienced fast growth and now represent around one quarter of the total EU supply of tourist accommodation. While short-term rentals offer more choice for tourists, an additional source of income for hosts, and an incentive for renovation, there are also concerns that in certain densely populated and touristic areas the conversion of residential accommodation into short-term rentals may reduce the supply of permanent housing, drive up rents and displace historic residents. The new Regulation on short-term accommodation rental services, which will is applicable from May 2026, will increase transparency on the identity of the host, location of the property and duration of the rental, equipping national authorities with the necessary data to adopt proportionate and justified measures. And the 7th Directive on Administrative Cooperation (DAC 7) requires digital platforms to report income earned by hosts, while the VAT in the Digital Age Package will ensure that short-term rental platforms charge and collect VAT on behalf of the host.
The upcoming Sustainable Tourism Strategy will support private and public sector initiatives to encourage the diversification of tourism flows to ensure that the economic benefits of tourism are spread more evenly and to avoid a disproportionate impact – including on housing affordability – in tourism hotspots.
The Commission is addressing the inefficient use of the current housing stock.
While the EU is facing a housing crisis, there are many vacant properties which could be made available for housing. A number of industrial or commercial buildings could be repurposed, and existing dwellings which are derelict or not used efficiently today could be transformed into livable places that better meet current needs. Converting existing buildings offers the advantage of avoiding new construction which result in high embodied carbon emissions, of reducing costly land use and infrastructure roll-out, as well as their negative impact on climate change resilience and biodiversity, and of providing attractive housing in areas which are central but not currently residential. The Commission is exploring with Member States how local measures related to planning and permitting, taxation or funding can help tackle the inefficient use of the current building stock by turning it into affordable housing.
Many homes are not properly insulated and maintained, making them unhealthy to live in, expensive to heat or cool, and by extension bad for the environment. Moreover, while energy efficiency renovations help reduce costs in the medium term, for many citizens footing the bill of the renovation is a challenge. The Commission has adopted the EU Affordable Energy Action Plan to bring down bills and reduce energy poverty: an important part of the challenge of delivering affordable, decent, and sustainable homes.
The Renewable Energy Directive sets targets for the use of renewable energy in EU countries. The goal is to hit 42,5 % of renewables in the overall energy consumption, including energy used in homes. Around 40 % of all energy in the EU is consumed in buildings, which is why the Energy Performance of Buildings Directive (EPBD) sets targets for all buildings in the EU to be carbon neutral by 2050. The measures which are most relevant in relation to affordable housing policies are those related to accelerating and increasing investments in the renovation of buildings while addressing the needs of vulnerable consumers. In addition, the EPBD covers many other aspects in relation to buildings and their sustainability (notably roll-out of renewable technologies and sustainable mobility, smartness of buildings, indoor air quality, operational GHG and embodied carbon emissions).
Many groups need special housing arrangements for a variety of reasons. Some of those include students, elderly, disabled, marginalised groups, migrants, and homeless people.
The operational toolkit on the use of EU funds for investments in social housing and associated services, mentioned also under "Finance/Investment", can help the relevant actors in the Member States to leverage EU funding to provide social and affordable housing to these groups.
The Commission closely monitors housing market developments in the EU as part of the European Semester, which assesses the macroeconomic impact of housing sector imbalances and offers recommendations tailored to each EU country, including on housing taxation, land use and permitting.
Taxation – on land and property purchases, rental income, or incentives for renovation – play a key role in housing markets. The Commission’s housing taxation database offers comparable data which can help inform Member States’ tax policies.
