The European Commission unveiled its first comprehensive Affordable Housing Plan on Tuesday, December 16 — the first such initiative in the EU’s history.
The plan outlines a wide range of interventions aimed at unlocking public funding for new housing supply, curbing short-term rentals, and reducing bureaucracy in construction projects.
“Europe must collectively take responsibility for the housing crisis affecting millions of citizens and act immediately,” said Housing Commissioner Dan Jørgensen, noting that housing prices across the EU have increased by more than 60% over the past decade.
“Housing is not just a commodity; it is a fundamental right,” he stressed, warning that inaction would create fertile ground for extremist political forces to exploit growing public dissatisfaction.
Public funding for housing
At the core of the plan lies a revision of state aid rules, explicitly allowing the use of public funds for the construction of affordable housing. This will enable member states to finance new homes not only for low-income households but also for middle-income groups increasingly excluded from the housing market.
In parallel, working with the European Investment Bank, national development banks and other financial institutions, the Commission plans to establish a pan-European investment platform to leverage public and private capital for social and affordable housing. These projects will be incorporated as a dedicated objective in national partnership plans shaping the allocation of funds under the EU’s next seven-year budget.
According to Commission estimates, EU countries need to add approximately 650,000 additional housing units per year on top of current supply levels (around 1.6 million units annually). Delivering this extra housing stock would require investments exceeding €150 billion per year.
To further boost housing supply, the plan also foresees a European Housing Construction Strategy, focusing on the simplification and digitalisation of permitting procedures. A dedicated package of further regulatory simplification is expected to follow in 2027.
The Commission also proposes investments to modernise the construction sector, establish common standards for building materials, and present a Construction Services Act by the end of 2026 to facilitate cross-border activity while safeguarding labour standards.
Short-term rentals under scrutiny
Particular emphasis is placed on addressing speculation and the expansion of short-term rentals. Over the next year, the Commission will collect data on the transformation of housing into investment assets, with the aim of shaping transparency and taxation policies to curb the financialisation of the housing market. As Commissioner Jørgensen noted, “essential homes are increasingly treated like gold or Bitcoin.”
Regarding cities under intense tourism pressure, the Commission announced a legislative initiative in 2026 that will equip national, regional and local authorities with tools to regulate short-term rentals through “evidence-based and proportionate” measures. These may include caps on overnight stays, seasonal restrictions or even temporary freezes on new licences.
Affordable student housing
The plan also includes targeted actions for vulnerable groups such as young people and students. Measures include funding for student residences and a dedicated Erasmus+ housing strand to support students from disadvantaged backgrounds.
Additional resources are earmarked for social housing for the homeless and the promotion of the “Housing First” model, which has delivered strong results in countries such as Finland.
Finally, the Commission brings the New European Bauhaus initiative back to the forefront, positioning it as a guiding framework for more sustainable, energy-efficient buildings and neighbourhoods, linking housing policy with the green transition and quality of life in Europe’s cities.
