EU Commission unveils first-ever 'affordable' housing plan

The European Commission unveiled on Tuesday (16 December) its first-ever plan to tackle Europe's worsening housing crisis, with measures ranging from increasing unit construction to controlling short-term rentals.

The package also includes a review of the EU's state aid rules, a strategy for housing construction and recommendations for the new European Bauhaus, an EU programme inspired by the original 1919 Bauhaus movement, which aims to fund construction projects that are meant to be sustainable and accessible.

“Affordable housing is not here to compromise or displace social housing. Social housing is absolutely key, but unhappily, we now also need to tackle the problems of the middle class and not only those that were covered by social housing," said vice president of the commission, Teresa Ribera, in Strasbourg.

"Social housing remains the cornerstone of support, but we open our ideas and projects to develop solutions for affordable housing,” she added.

The plan focuses on four main areas: boosting housing supply, unlocking investment, regulating short-term rentals in high-pressure areas, and supporting the most vulnerable groups including young people, students, and essential workers.

Key measures include revised state-aid rules to make it easier for governments to fund affordable and social housing, simplified planning and permitting procedures, and upcoming legislation on short-term rentals, planned for 2027.

Currently, around 1.6 million housing units are built in Europe each year.

The commission assumes that on average two million new units are needed each year. With its new initiative, it is planned to add 650,000 new ones per year, at a cost of around €150bn annually.

Homes, and the housing crisis, have been on the EU’s agenda since the last election to the European Parliament in June 2024.

After that, the parliament created for the first time a special committee on housing. And the commission appointed its first housing commissioner, the Danish Dan Jørgensen.

Up until now, housing was never addressed per se by the EU, because all the competences lie with the member states.

Citizens' priority

“One of the reasons why probably Ursula von der Leyen and other politicians now have accepted to put this at the core of the agenda as one of their priorities, is that as you travel around Europe, and as I'm sure they do, everywhere you go you see that this is a priority for the citizens,” said Italian social democrat MEP Irene Tinagli, chair of the housing committee, last week.

Since 2010 buying a house has become 53 percent more expensive, rent went up 25 percent and the cost for building rose 56 percent.

The pressure is especially high in cities where short-term rentals pose an extra difficulty. Short-term rentals have almost doubled between 2018 and 2024. 

This has taken so many of the units off the market that cities have started implementing their own legislation to deal with the issue. For example, Barcelona will ban short-term rentals by November 2028.

Construction costs have also more expensive: between 2010 and 2024 prices in the EU rose by 56 percent. The commission expects the housing demand to grow by more than two million units per year.

Only six to seven percent of housing in the EU is reserved for social housing, according to their own data. This leads to a growing risk of homelessness, as available units are used and bought up for tourism use.

The commission's plan will be driven by a new ‘Housing Alliance’ bringing together member states, cities, EU institutions, housing providers, and civil society, to enhance cooperation and include local insights to address the housing crisis.

The commission is set to present a progress report before the end of its mandate in 2029, and host the first-ever EU housing summit in 2026.

However, regions have warned that funding is crucial.

"To make this work continue over the coming decade, the next EU long-term budget must allow regions and cities to shape and deliver interventions that address the housing crisis both in the short term and in the longer term, easing the pressure on large urban areas and promoting the strategic role of smaller and middle-size towns,” said the president of the committee of the regions Kata Tüttő in a statement.

MEP Tinagli said the commission's plan was proof the EU was finally taking practical action on the housing crisis, noting many of the parliament's concerns were reflected in it.

Lead MEP for the European People's Party on the issue, Borja Giménez Larraz, said simplification was key: reducing administrative burdens, speeding up permits, and reinforcing property rights for legal certainty and market stability.

The parliament is scheduled to adopt its draft report on the housing crisis in the EU in the first half of 2026.

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