European Commission presents Affordable Housing Act

One of the main objectives of this legislation is to ensure greater transparency and legal certainty for national authorities in regulating their residential markets.

The Affordable Housing Act was finally presented this Wednesday, an initiative of the European Commission and part of the European Affordable Housing Plan, aimed at curbing rising house prices and increasing supply in cities that have become all but unaffordable.

Brussels acknowledges that the lack of affordable housing has become one of the “most urgent concerns” for Europeans, and points out that, according to the latest Eurobarometer, more than 50% of city dwellers consider housing a problem where they live. “Today’s proposal addresses these concerns”, given that the housing crisis “also weakens our competitiveness”.

The Commission stresses that some cities and leading tourist destinations face greater housing pressure, as homes are increasingly used for purposes other than permanent residence. It points to central Madrid, where for every 100 homes on the long-term rental market there are 40 in short-term rental. In Zagreb, more than 19% of dwellings are vacant, and in Malta over 60% of short-term rentals are managed by hosts with two or more properties listed.

The Affordable Housing Act “gives public authorities legal certainty when they choose to act, on the basis of local specificities, within the framework of EU law”. It also aims to bring greater transparency as to what can and cannot be done within each national market.

Ursula von der Leyen, President of the European Commission, comments that “a year ago, I promised to tackle the problem of access to housing in Europe. Today, we are taking one step in this direction, providing greater clarity and support to local authorities and communities, on the basis of local realities”. She acknowledges that “the lack of affordable housing is a problem for so many European citizens. Essential workers and students cannot live where they work and study. But more than that, it is a matter of fairness”.

Dan Jørgensen, European Commissioner for Energy and Housing, argues that “housing is not just a commodity. It is a right and a cornerstone of human dignity. While building new homes and renovating remain essential, we urgently need to make better use of the housing we already have. The Affordable Housing Act gives our Member States and our cities the tools they need to make more affordable homes available, especially in the areas hardest hit by the crisis. With this common European tool, we can truly bring a change in people’s lives”.

New rules to help identify areas under housing stress

The new rules set out in this legislation aim to help local authorities (such as municipal councils) identify areas under housing stress using a common methodology. Where restrictions are introduced, for instance on short-term rentals or vacant dwellings, evidence must be provided that these activities are putting pressure on the housing market, and the measures adopted must be targeted, necessary and proportionate.

The Commission takes the view that, in short-term rentals, intervention should target activities that reduce the long-term housing stock, particularly where their scale, frequency or commercial character aggravates housing pressure. Beforehand, however, authorities must always demonstrate that this adverse effect is occurring, applying the EU Short-Term Rental Regulation.

The new legislation also covers the second-home market and vacant dwellings, clarifying a number of points so as to protect predictability and citizens’ legitimate expectations. New conditions relating to property acquisition cannot be applied retroactively, for instance, and transition periods must be provided for accordingly.

Measures must be better targeted at local level

The Commission’s aim is for locally implemented measures to be better targeted, evidence-based and reviewed over time where necessary, always accompanied by others that encourage an increase in housing supply. “Investors and owners operating across the various markets will benefit from the greater clarity brought by this European legislation”.

Accelerating housing supply

The new proposal is accompanied by a recommendation on housing affordability and supply in areas under stress. “It supports authorities in their efforts to increase housing supply where it is most needed, notably through faster planning and permitting procedures for new construction, renovation and building refurbishment, as well as by facilitating investment. Authorities are also encouraged to focus these efforts on increasing housing supply through Housing Acceleration Plans”.

The legislative proposal will now pass to the European Parliament and the Council under the ordinary legislative procedure. In parallel, the Commission states that it “will continue to work closely with Member States and all relevant stakeholders to implement the European Affordable Housing Plan”.