What can Brussels do about the housing crisis?
The European Commission is preparing a Community plan for affordable housing that is still in its initial phase
BarcelonaNow that Brussels is considering changing fiscal rules In order to leave defence spending out of deficit calculations, another demand is being made. Could it do the same in an area with urgent financing needs throughout the European Union (EU), such as housing? The European Commission did not relax its sacred 3% deficit caps for member states even during the 2008 economic crisis, which put the eurozone at risk. The only exception so far was the pandemic, when these were frozen and governments were given free rein to spend what was necessary for economic recovery. Armaments will be the next anomaly in Brussels' strict rules, but there are no plans or prospects for housing to be added. So how else does the European Commission want to solve a housing emergency that is affecting the Old Continent and over which it does not have the necessary powers?
For the first time, the new community executive will have a Housing (and Energy) Commissioner this term, the Danish Dan Jorgensen, who hangs on to the vice-presidency of the Spanish Teresa Ribera. A specific working group was already set up on 1 February to develop and implement a European plan for affordable housing and other policies to "address the structural causes of the housing crisis". However, these efforts are still in an early consultation phase, where they will hear about the problems faced by member states and their regions and what solutions - more or less effective - have been applied so far. EU sources admit that the plan is not expected to be approved before next year.
These same voices are advancing that they are studying whether the regulations on state aid could be revised to allow member states to invest more in affordable housing, that is, to subsidize companies that build social housing developments. Jorgensen himself confirmed this this week during his speech at the first meeting of the special committee on the housing crisis, which has also been created by the European Parliament.
However, this is not what the main affected cities are demanding. Some of the large cities of the EU – such as Barcelona, Paris, Athens or Amsterdam – asked the community institutions at the end of February to make fiscal rules more flexible and that investments in housing not be computed when calculating the deficit of the member states. They also urged Brussels to increase the budget that it allocates to this area and that the municipalities have "direct access" to European funds to be able to dedicate them to the construction of "social and affordable" apartments.
The role of the EIB
While there are no plans to implement such an exception, the Commission also wants to draw up a European strategy for public housing construction. This would include measures on how to reduce costs, improve the skills of workers in the sector and combine it all with sustainability. "I was a member of this House for almost 10 years, from 2004 to 2013, and I don't remember having any discussions on housing. Probably, if we had had them twenty years ago, we might not be in this situation today," Commissioner Jorgensen told the European Parliament this week. He also noted that by 2023 around 10% of the European population will spend 40% or more of their disposable income on housing and other related expenses.
But the area where Brussels can do the most to solve this emergency is the financing of new investments in affordable housing. To this end, the bank wants to work with the European Investment Bank (EIB), chaired by former Spanish Vice President Nadia Calviño, and other international and national financial institutions to mobilise more funds in this direction. Last summer, the EIB already granted a loan of 490 million euros to the Generalitat to finance the construction of more than 4,300 social housing units for rent in Catalonia. Last Thursday, it did the same with Barcelona City Council, to which it has lent 175 million for housing, but also for climate issues.
"The EU is already mobilizing substantial financing," Jorgensen said this week at a forum organized by the EIB in Luxembourg. He also recalled that the Recovery and Resilience Facility has allocated more than 22 billion euros to social housing throughout Europe and that nearly 85 billion euros will go to energy efficiency reforms and the construction of buildings adapted to these new criteria. "We will also look for sources of financing within EU funds. For example, we will bring forward a proposal to allow member states to inject liquidity into the housing market and double the cohesion policy planned for investments in affordable housing," insist sources from the community executive.
On other issues linked to the housing crisis such as the phenomenon of seasonal rentals, the European Commission is not getting too involved and assures that it will study its consequences and that it will implement a "robust" regulatory framework.