Context

The right to housing is enshrined in the United Nations Universal Declaration of Human Rights, recognised in the Council of Europe's Revised European Social Charter and in the (legally non-binding) European pillar of social rights.

Over the years, demographic trends such as urbanisation, changing household structures and population ageing have increased the demand for flexible living, smaller dwellings and accessible housing. However, the supply of housing in the EU has not kept up with demand due to construction costs; investment in housing has declined, as has the number of residential building permits. While the construction sector occupies a stable position in EU economic activity (5.5 % of gross value added in 2024), it suffers from skills and labour shortages.

Recent increases in living costs have exacerbated a longstanding problem with housing affordability. As housing costs have grown faster than household incomes, decent housing has become unaffordable to growing groups of the population, in particular since 2019.¹ In parallel, the offer of short-term tourist accommodation has grown with the development of online platforms. Such short-term rentals have brought benefits to hosts, tourists and many regions, but the lack of appropriate rules, in combination with speculative investments, have put further pressure on rent prices in cities.

The worsening of housing affordability has particularly strong impacts on younger generations. Facing the combination of high costs, insecure tenure and limited access to ownership, many young adults continue living in the parental home when they would prefer to live in their own home.

Housing quality remains a problematic issue in terms of living space, lack of basic sanitary amenities or accessibility for people with disabilities. Furthermore, many residential buildings need to be made energy-efficient and decarbonised to achieve the EU's energy and climate goals, lower energy consumption and reduce users' energy bills.

While each country faces a specific set of challenges, the crisis is pan-European in scope. Homelessness is rising, mainly in cities, and involves increasing numbers of minors. Data varies by country, as no agreed definition of homelessness exists and measurement methods are not harmonised. Evictions are widespread, though formal procedures and exclusion rates vary across countries.

Housing provision is mostly shaped by local, regional and national laws and policies, and the related challenges are best viewed from city-and regional level data. Due to consequences for labour mobility, regional competitiveness and social cohesion, housing has become not only a social concern, but also an economic and territorial challenge. The EU has no direct competence in housing and only a limited scope of action to address social issues. Previously, it has carried out a number of initiatives to support housing, and has provided recommendations² and funding. Nonetheless, existing EU legislation impacts on several aspects of housing provision.

Existing EU legislation and initiatives

Under the EU rules on State aid, the 2012 Decision on Services of General Economic Interest (SGEI Decision) allowed Member States to support social housing 'for disadvantaged and socially less advantaged groups', including the homeless, without notifying the Commission, regardless of the amount. Support for affordable housing, on the other hand, was limited to €15 million per year, with higher amounts requiring notification. The definition of the target group for non-notified support has long been criticised as too narrow, and the notifications seen as an additional complication.

According to EU 2014 public procurement rules, contracting authorities are to award public contracts – also for construction works – based on the 'most economically advantageous tender' (MEAT) criterion, which emphasises the best value for money by considering quality, environmental and social factors, life cycle costs and innovation. The implementation of this approach, known as strategic public procurement, has remained uneven across the EU.³

In taxation, which is a Member State prerogative where EU competences are limited, Member States may apply a reduced VAT rate (below the standard rate of 15 %, but not lower than 5 %) to the supply of social housing since 2006 (Annex lll). However, they are not obliged to do so and are also free to further restrict the application of the reduced VAT rate (for example, apply the reduced VAT to renovation of houses but exclude demolition and repairs).

EU rules on credit agreements guaranteed by a mortgage sought to ensure that all consumers who take out a mortgage to purchase an immovable property are adequately informed and protected against the risks. The 2014 Mortgage Credit Directive was complemented in 2021 with rules on credit services, to protect consumers in cases of transfer of credit.

The 2006 Services Directive set rules and principles to allow service providers, including construction service providers, to establish more easily in another EU country or to provide temporary services across borders. The updated 2024 Regulation on marketing of construction products adapted standardisation to new technical developments and introduced product digital passports, to better inform consumers and facilitate green choices.

To address growing labour shortages, the EU revised the Directive on Posting of Workers.⁴ The updated rules, addressed some previously problematic issues, including posted workers' pay and working conditions. However, to improve the situation on the ground, more frequent inspections by the European Labour Authority (ELA) would be needed. Furthermore, another element meant to facilitate workers' mobility, the modernisation of EU rules on social security cover, has remained unresolved since the reform proposed by the European Commission in 2016.

With the adoption of EU legislation on climate and energy (the 'fit for 55' package), EU Member States have accepted the obligation to reduce their greenhouse gas (GHG) emissions by a net 55 % by 2030 and achieve climate neutrality by 2050. The EU legislative framework is set by a number of new or revised pieces of legislation (the European Green Deal), including the revised Energy Performance of Buildings Directive (EPBD), with new targets for residential buildings,⁵ the revised Energy Efficiency Directive (EED), which defines energy poverty and obliges Member States to adopt measures to protect those it affects, and the Renewable Energy Directive (RED), which sets an indicative target of a 49 % share of renewable energy in the buildings sector.

In 2023, the Commission partly amended the State aid rules (General Block Exemption Regulation), to facilitate and speed up energy-related renovations. Following the revision of the EU Emissions Trading System (ETS), a new emissions trading system was created (ETS2), which also covers emissions from buildings and transport and will become fully operational in 2028.

In terms of initiatives, the EU launched the renovation wave, a strategy to reduce energy consumption and GHG emissions by renovating 35 million buildings by 2030. The strategy included the affordable housing initiative, focusing on renovation of social and affordable housing infrastructure, and the New European Bauhaus initiative to support grassroots-led transformation of urban neighbourhoods to make them sustainable, inclusive and attractive.

The European platform on combating homelessness (EPOCH) was set up in 2021, to deliver on a joint commitment by all Member States and EU institutions to work towards ending homelessness by 2030.

EU funding

In the current 2021-2027 multiannual budget,  €43 billion has already been mobilised for housing-related projects. The Commission's 2024 toolkit on housing outlined how to use EU funds for investment in social and affordable housing and associated services. Furthermore, the Recovery and Resilience Facility, the main instrument of the NextGenerationEU instrument, plays a significant role by supporting 50 housing-related investments and 21 reform initiatives. Nevertheless, the Commission estimates that to meet the existing demand, about €150 billion is needed annually, to add an extra 650 000 housing units to the 1.6 million currently built.

The Social Climate Fund was adopted to mitigate the potential impact of the inclusion of buildings in the EU ETS on vulnerable households and businesses. The fund, with a budget of €65 billion (which national top-ups could bring to over €80 billion), can finance investment and measures to improve insulation and energy efficiency, including clean heating.

With the mid-term review of EU cohesion policy, the Commission provided Member States with flexibilities and financial incentives to reprogramme a part of cohesion funding (under the European Regional Development Fund and Cohesion Fund and the Just Transition Fund) towards housing projects. According to the Commission, €3.3 billion has already been reallocated to affordable and sustainable housing under 84 programmes in 15 Member States.

In the proposed next long-term EU budget for 2028-2034 , the future National and Regional Partnership Plans include social and affordable housing among their specific objectives, which would allow Member States to undertake housing-related investment and reforms. Interinstitutional negotiations on the set of budget proposals are ongoing.

EU 2024 housing milestone

Enrico Letta, in his report on the EU single market, saw the need to revise the existing EU rules and tools to 'incentivise socially inclusive and sustainable housing systems rather than exacerbate the current housing crisis'. The La Hulpe Declaration, signed by the European Parliament, the Commission and most Member States, insists on continued efforts to eradicate homelessness. During the 2024 European elections, affordable housing crystallised as an issue warranting more EU attention.

All EU institutions, within their varying competences and timescales, set out to help shape the EU approach to housing. In the 2024-2029 College of Commissioners, Dan Jørgensen serves as Commissioner for energy and housing. He was tasked with working on a first European affordable housing plan. The European Parliament set up a special committee to help identify sustainable and affordable solutions (see below).

Council

In the European Council conclusions of 23 October 2025, EU leaders called on the Commission to present an ambitious and comprehensive plan for affordable housing to support and complement Member States' efforts, duly respecting the principle of subsidiarity and national competences.

In the presidency conclusions, adopted on 1 December 2025 (and supported by 26 Member States), ministers called on the Commission to promote stronger cooperation at EU level on homelessness and identify suitable and balanced solutions to tackle the negative effects of short-term rentals on the availability and affordability of housing for residents. The Council asked the Commission to map EU legislation impacting on housing, with the aim of simplifying funding, planning, permitting, construction and renovation, to facilitate the provision of affordable and sustainable housing. EU ministers responsible for housing discussed the Commission's European affordable housing plan on 3 February 2026.

Advisory committees

The European Economic and Social Committee (EESC), in its opinion of 18 September 2025, calls for the right to housing to be formally enshrined in EU primary law and for increased public investment in housing. It calls on the Commission to take a coordinated initiative with the Member States to regulate short-term rentals and recommends that all Member States introduce 'housing first' programmes to tackle homelessness.

The European Committee of the Regions (CoR), in its own-initiative opinion of 13 May 2025, highlights the territorial diversity of the housing crisis and the need for a place-based approach to enable local and regional authorities to develop tailored responses. The CoR demands that quality affordable housing be made an explicit goal in the next MFF. The disbursement of the EU funding should be subject to an urban development plan that includes mobility and housing, as well as to strict and long-term conditionalities to ensure that affordable housing units built with EU funding are not sold off to the private market. The CoR calls for an EU real estate transaction transparency registry, indicating the beneficial owner of each property.

Broader developments

The EU economic governance framework consists of fiscal rules that oblige EU governments to limit their debt levels and budget balances. Following a 2024 reform, the new economic governance framework focuses on public expenditure growth. It allows Member States more flexibility in their fiscal plans to define investment and reform aimed at encouraging public investment in strategic areas, including green investment.

While many aspects related to short-term rentals (STRs) are regulated at the local and regional level, the 2024 EU Regulation on data collection and sharing relating to STRs, which will start applying from 20 May 2026, seeks to improve transparency and enable local authorities to develop appropriate policies based on solid data.

In March 2025, the Commission and the EIB took the first step towards a pan-European investment platform for affordable and sustainable housing. The EIB announced its upcoming action plan to support housing and planned investments of around €10 billion in the next two years.

The Commission adopted the New European Bauhaus Facility (NEB Facility) under the Horizon Europe programme. It is the first multiannual budget tool to support the initiative, running from 2025 to 2027 with €120 million per year. It aims to transform neighbourhoods in cooperation with communities, support innovation and enable change.

Council adopted the package on VAT in the digital age, which brings changes to three different aspects of the EU VAT system. The new rules will require online platforms to pay VAT on STRs in most cases where individual service providers do not charge VAT. The EU system should be in place in 2030 and national systems by 2035.

To ensure solid data for policymakers to assess potential risks to financial stability, the Commission tabled a proposal for a regulation on non-financial commercial real estate statistics (yet to be negotiated). While financial statistics covering financial system exposure to commercial real estate credits fall under the competence of the European Central Bank and the European System of Central Banks, few official sources of non-financial statistics are available today.

In July 2025, the Commission amended the sustainable finance framework (the conditions that economic activity has to meet to qualify as environmentally sustainable), to simplify companies' reporting, including in the construction sector.

In December 2025, the Commission proposed a regulation to speed up environmental assessment (yet to be negotiated ), to streamline permitting processes for strategic sectors, including affordable and social housing.

The co-legislators adopted changes to the regulation on European statistics on population and housing with the aim of ensuring comparable data from EU countries on demography, housing and households, including hard-to-reach populations (such as the homeless) to support evidence-based policymaking.

European Commission: The European affordable housing plan

On 16 December 2025, the Commission put forward the European affordable housing plan. This communication is organised in four pillars, outlining how the EU intends to boost affordable housing supply, mobilise investment, enable immediate support while introducing structural reforms, and prioritise the people and territories most affected by the housing crisis. The plan sets out 10 key areas of action where the EU can add value and support initiatives led by other public authorities and stakeholders. It also announces several initiatives for 2026 (see Outlook).

Alongside the plan, the Commission put forward texts addressing the following issues:

The Commission, the European Investment Bank and national and regional promotional banks (such as the European Bank for Reconstruction and Development (EBRD) and the Council of Europe Development Bank (CEB)) are developing a housing investment platform to mobilise public and private capital and provide advisory support. The platform will be open to national promotional banks and international financial institutions. The EIB action plan to support housing includes a new housing one-stop-shop portal to provide advice and finance to support innovation in the construction sector, build affordable homes and invest in energy efficiency and the renovation of housing stock across Europe.

European Parliament views

On 10 March 2026, Parliament adopted its recommendations for solutions for decent, sustainable and affordable housing, prepared by its Special Committee on the Housing Crisis (HOUS), with rapporteur Borja Giménez Larraz (EPP, Portugal), by 367 votes in favour and 166 against, with 84 abstentions.

Members call on the Commission to earmark specific funds for renovation, to improve the energy performance of residential buildings and combat energy poverty. In their view, the upcoming law on STRs should set common EU objectives and leave EU-countries, regions and local authorities the flexibility to design and implement measures adapted to their circumstances, seeking a balance between developing tourism and ensuring access to affordable housing.

Members also call for tax measures to support low- and middle-income households, the removal of tax barriers (such as high registration fees) for first-time buyers, and tax conditions that make long-term rentals more affordable. Parliament condemns squatting, demands stricter measures to protect owners and urges Member States to strengthen the protection of tenants' rights to prevent disproportionate rent increases.

Parliament's Members demand simpler permitting procedures, including digital permit-granting procedures, and a 60‑day deadline for granting permits. Regarding construction, Parliament recommends scaling up innovative and sustainable products, reinforcing the single market for raw materials, and including minimum 'Made in EU' origin requirements for components in EU co-financed projects. Members also call for action to improve the working conditions of skilled workers through training and fair wages, easier intra-EU labour mobility, mutual recognition of professional qualifications and, where necessary, the recruitment of skilled workers from third countries.

Ongoing initiatives and outlook

The Social Climate Fund starts operating in 2026. To receive funding, countries had to submit a national plan to the European Commission for assessment by 30 June 2025 (not all countries did so).

To alleviate labour shortages (beyond the construction sector), EU co-legislators adopted the Regulation establishing the talent pool platform, which should help match vacancies in shortage occupations with profiles of jobseekers from outside the EU. However, Member State participation remains voluntary and registration on the platform will not guarantee the issuance of work or residence permits, which are subject to national procedures. Participating employers will have to comply with EU and national legislation on fair recruitment and working conditions.

The proposed regulation on electronic declaration of posting of workers, meant to facilitate the submission of posting declarations and inspections, awaits further interinstitutional negotiation. Negotiating efforts to finalise the 2016 reform of social security coordination rules could – if successful – facilitate cross-border mobility of workers. The Commission plans to address both these issues within its 2026 fair labour mobility package, which is to include legislative proposals to strengthen the European Labour Authority and to introduce a European Social Security Pass.

As announced in the affordable housing plan and following a call for evidence, the Commission plans to put forward a proposal for a directive on an affordable housing act, and with it a further legislative initiative on short-term rentals. The initiative is expected to help public authorities identify areas under housing stress and provide them with legal certainty as regards measures that can be taken to temporarily protect housing markets, and outline longer-term solutions.

Building on the published strategy for housing construction, the Commission plans to table a legislative act on construction services in 2026, to ensure that companies and professionals can provide construction services across borders, without lowering labour and social standards.

Among further initiatives announced in the affordable housing plan, the Commission plans to:

The revision of the EU public procurement framework is ongoing. It remains to be seen whether the Commission opts for further non-legislative options (guidance) or other means to advance EU strategic goals through public procurement.

In the second quarter of 2026, the Commission plans to put forward the EU heating and cooling strategy, to support the implementation of current legislation to accelerate decarbonisation of the sector and improve its efficiency.