Brussels to free up cash, target tourist flats in EU’s first-ever Affordable Housing Plan

From Lisbon to Tallinn, Europeans are overwhelmed by soaring home prices. This week, Brussels intends to do something about it.

“This is a real crisis,” said European Commissioner for Housing Dan Jørgensen in an interview with POLITICO, ahead of the approval of the bloc’s first-ever Affordable Housing Plan. “And it’s not just enough to talk about it.”

To that end, the package will seek to free up public cash for the construction of new homes, track speculation in the housing market, and give regional and local governments tools to rein in the short-term rentals contributing to the housing shortage.

“The plan will be a mix of concrete actions at the EU level and recommendations that member states can apply,” Jørgensen said, adding that the European Commission wants to give national, regional and local governments ways to make real changes on the ground — while not overstepping its role in an area over which it has no official competence.

“This is a real problem affecting millions of people, and the inaction is playing right into the playbook of right-wing populists,” Jørgensen noted, citing the ultranationalist parties that have stoked discontent over sky-high home prices to score major victories in countries like the Netherlands and Portugal.

“Normally the EU has not played a big role here,” he added. “That needs to change.”

Cash, tools and transparency

The most concrete action set to be announced this week is a revision of state aid rules to make it easier for national governments to build affordable housing.

Member countries have long complained they can only use public cash to provide homes for low-income families. Reflecting the fact that even middle-class earners are now struggling to pay for shelter, the new regulations will allow funds to be used for all groups priced out of the housing market.

The package will also give national, regional and local authorities tools to target the tourist flats exacerbating the housing shortage in cities like Barcelona, Florence and Prague.

“I’m not on the side of the people who call for banning short-term rentals,” Jørgensen clarified, adding that such platforms have offered travelers the ability to experience Europe differently, and provided some families with a needed source of income. But the model has grown at a rate “no one could have imagined, with short-term rentals accounting for 20 percent of homes in some very stressed areas,” he noted. It has turned into a “money machine instead of what it was intended to.”

The commissioner stressed that national, regional and local leaders would ultimately be the ones deciding whether to use the tools to rein in short-term rentals. “We’re not going to force people to do anything,” he said. “If you think the status quo is fine, you can keep things as they are.”

In another first, a more abstract section of the package will also aim to address speculation in the housing market.

“This is a real crisis,” said European Commissioner for Housing Dan Jørgensen in an interview with POLITICO. | Lilli Förter/Getty Images

While insisting he’s “not against people making money,” Jørgensen said Europe’s housing stock was being treated like “gold or Bitcoin and other investments made for the sole purpose of making money” — an approach that ignores the vital role of shelter for society at large. “Having a roof over your head, a decent house … is a human right,” he argued.

As an initial step, this week’s package will propose the EU track speculation and determine the scope of the problem. However, Jørgensen acknowledged that using the resulting data for concrete action to tackle the market’s financialization might prove difficult. “While no one is really arguing this problem doesn’t exist, there’s a political conflict over whether it’s a good or a bad thing.” But regulation is essential for the proper functioning of the internal market, he added.

The competence question

The Commission’s housing package will also include a new construction strategy to cut red tape and create common standards, so that building materials manufactured at competitive prices in one member country can be easily used for housing projects in another.

Additionally, there will be a bid to address the needs of the over a million homeless Europeans, many of whom aren’t citizens of the countries in which they are sleeping rough. “We want to look at what rights they have and how these are respected,” Jørgensen said. “We’re talking about humans with needs, people who deserve our help and compassion.”

The commissioner explained the complexity of the housing crisis had required a “holistic” approach that led him to work in tandem with Executive Vice Presidents Teresa Ribera and Roxana Mînzatu, as well as internal market boss Stéphane Séjourné and tech chief Henna Virkkunen, among others.

He also stressed the package didn’t constitute a power grab on the Commission’s part, and that national, regional and local governments are still best positioned to address many aspects of the crisis. “But,” he said, “there are areas where we haven’t done anything in which we can do something.”

While much of the plan will consist of recommendations member countries won’t be required to implement, Jørgensen warned against ignoring them. The Commission is providing solutions, he said, and “policymakers need to answer to their populations if they don’t do something that’s pretty obvious they could do.”

“Normal citizens will use every opportunity to make their demands known, be it in local, national or European elections,” Jørgensen explained. “I’m respectfully telling decision-makers all over Europe that either they take this problem seriously, or they accept that they’ll have to hand over power to the populists.”