Impact community Cohesion112

Local flexibility must remain at the heart of EU Housing

The European Commission has shared its proposal for an Affordable Housing Act, introducing a common EU framework for assessing and justifying housing-related measures at the local level. The proposal aims to provide greater legal certainty for public authorities while explicitly recognising that housing policy remains primarily a national, regional and local competence.  

The legislative proposal is accompanied by a Recommendation on Housing Affordability and Supply in Areas under Housing Stress, introducing the concept of affordable housing areas and proposing measures to address housing stress. 

CEMR welcomes the publications as important milestones in the growing recognition of housing as a European challenge that requires action at all levels of governance. Local and regional governments are on the frontline of addressing housing affordability and availability, and CEMR has consistently advocated for a framework that strengthens their ability to act while respecting territorial diversity.  

However, despite CEMR repetitive efforts indicating the importance of flexibility and strengthened capacity for local and regional governments, the Commission’s main solution to address housing affordability is a standardised definition for housing stress at EU level.  

While CEMR positively takes note of repeated recognition of regional and local competences in the proposal, the reliance on “competent authorities” under Article 4 in the Housing Act raises concerns for local and regional governments. That is because, according to this terminology, it is left to the discretionary interpretation of each Member State. The use of the terminology continues throughout the Recommendation, suggesting significant decision-making power and responsibility at the level of a “competent authority”.  

A common definition of housing stress 

Throughout its advocacy, CEMR has pushed to keep the Affordable Housing Act flexible enough to reflect Europe’s varied housing realities. In its recommendations to the Commission, CEMR argued for a place-based approach that preserves local assessment mechanisms rather than imposing a single, uniform definition of housing stress. 

Yet despite leaving room for “competent authorities” to decide what action is necessary, Article 6 in the Act still sets out a common EU methodology for determining when an area qualifies as being under housing stress. 

Under the proposed rules, an area can only be classified as experiencing housing stress if three conditions are met: the price-to-income ratio stands at 8 or higher, that ratio has risen over the past decade, and the pressure shows no sign of easing over the next three years. 

CEMR has repeatedly pointed out that this fairly narrow lens risks missing the bigger picture. Housing stress takes many forms across Europe and can’t always be reduced to a single affordability indicator. Pressures may come from tourism, supply shortages, demographic shifts, land constraints, planning and permitting bottlenecks, infrastructure gaps, or a simple shortfall in affordable and social housing. 

This nuance does appear in the proposal’s explanatory sections, in the Recommendation, and in comments made at the press conference. But it largely fades from view in the operative provisions themselves, where housing stress is defined almost exclusively through price and income indicators.  

What’s more, experience suggests local authorities often have legitimate public-interest reasons to act that go beyond affordability alone: environmental nuisance, for instance and the proposal makes no room for these.

Ellen van Selm (CEMR spokesperson on Housing and Mayor of Purmerend (The Netherlands)):

’We are pleased to see the efforts of the EC to support solving the housing crisis. However, we encourage the Commission to create a more beneficial framework for local and regional authorities. By introducing a rigid definition of housing stress, increasing burdens to deliver proof while data is not always available, and focusing repeatedly on short-term rentals, the Affordable Housing Act limits the place-based and innovative solutions that local and regional governments need. In practice, this makes it more difficult for towns, cities and regions to act proactively when housing pressures emerge.’’ 

A range of measures available to authorities 

The proposal largely reflects what CEMR has been asking for: giving local and regional governments the flexibility to deploy different interventions depending on local circumstances. Under the conditions set out in the Regulation, “competent authorities” would be able to restrict short-term rentals in non-primary residences and regulate the acquisition or use of land and residential property for purposes other than primary living. The proposal also allows for territorial targeting and differentiated approaches. 

Still, CEMR has consistently stressed that local authorities need to be able to act before housing pressures spiral out of control and, on this front, concerns remain. Article 9 requires authorities to prove that an activity has had an adverse effect on housing affordability or availability for at least three years before any restrictive measures can be introduced. For many local governments, this could place an additional burden on authorities and delay action to address housing pressures early enough.  

On streamlining, the Recommendation proposes creating Housing Acceleration Areas, to be identified by the “competent authority.” These zones would benefit from a unified permitting timeframe and, where relevant, tacit approval. But CEMR warns this approach doesn’t adequately account for local realities, which are shaped by complex legislative frameworks and need to be assessed case by case.  

The legislative proposal also seeks to clarify how housing measures interact with existing Internal Market legislation, including the Services Directive, with the aim of giving public authorities greater legal certainty and reducing the risk of litigation. Even so, CEMR warns that the Affordable Housing Act could end up doing the opposite for municipalities, adding extra difficulty and legal uncertainty around the burden of proof required across the different frameworks. 

Looking ahead 

The Affordable Housing Act represents a significant step in building a clearer EU framework for housing-related measures and includes several elements long advocated by local and regional governments. The Commission Recommendation indicates recognition of the importance of subsidiarity and rightfully promotes a holistic understanding of the challenges that are faced at the local level.  

However, important questions remain regarding the proposed definition of housing stress, the allocated responsibility to ‘competent authority’, the practical feasibility of making the right assessments, and the reduced flexibility for authorities to address broader forms of housing pressure that are not fully reflected in affordability indicators alone.  

Beyond the Affordable Housing Act and its action on securing the legality of local and regional housing policies, CEMR highlights that addressing the housing crisis will also require massive investments capacities. In this respect, discussions on the future of the Multiannual Financial Framework and Cohesion Policy should reflect the political attention given to housing and enable adequate support for local action to address the housing crisis. 

CEMR will continue to engage with the European institutions throughout the legislative process to ensure that the final legislation provides local and regional governments with the flexibility, legal certainty and practical tools needed to respond effectively to Europe’s diverse housing challenges.

For more information, contact:

Leonie Kuhlmann

Policy Officer – Climate and Energy