The Housing Crisis in the European Union

The escalating housing costs across the European Union (EU) are causing widespread concern, significantly affecting the living conditions of its citizens.  The fear of losing accommodation, becoming overburdened financially, or being forced to live in substandard housing is becoming a reality for many.

This situation is particularly challenging for young people who are unable to leave their parental homes due to financial constraints. While renters in the private market have faced the largest cost increases and experienced the most problems with quality of accommodation, people with other types of housing tenure are also facing difficulties. This article explores the current housing crisis in the EU and discusses potential policy actions that could both address and prevent these problems.

The Housing Crisis: Renters and Homeowners Alike

Particularly, private market renters are experiencing housing insecurity, with 46% expressing concerns that they may have to leave their accommodation in the next three months due to affordability issues. Private tenants report problems with the quality of their accommodation, such as poor energy efficiency and lack of space, to a greater degree than homeowners and social housing tenants.

However, housing problems are not confined to private renters. Homeowners with variable-rate mortgages are grappling with rapidly increasing interest rates and the rising cost of living. For instance, in Poland, the Borrower’s Support Fund, an initiative to support mortgage holders with payment difficulties, has seen a surge in demand since interest rates began to rise. An economic downturn would put even more people at risk.

Even among people who own their home without a mortgage, many are struggling to pay for other housing-related costs such as utility bills. Furthermore, many homeowners are unable to keep their homes at a suitable temperature due to poor energy efficiency and financial strain.

The Role of Policymakers in Addressing the Housing Crisis

Addressing the housing crisis requires a multifaceted approach. Policymakers need to consider expanding the supply of quality housing to put downward pressure on rents and prices. Homes need to be built and renovated, while the practice of leaving properties vacant needs to be discouraged. However, it is not realistic to rely exclusively on increasing supply for a short- to medium-term solution, and the challenge needs to be addressed on several fronts simultaneously.

Detecting the early warning signs of payment difficulties so that personalised support can be activated is fundamental. For instance, Sweden requires planned evictions to be reported to a designated organisation, which then approaches the household and provides support to prevent eviction. Access to debt-settlement procedures and debt advice is also key, both for individuals with mortgage-payment issues and for those with accumulated rent or utility arrears.

Payment difficulties and financial strain should also be prevented rather than only addressed post-factum. Policymakers can learn from Belgium, where most mortgage interest rates are fixed, and creditors are required to fund debt support, with contributions depending on the proportion of loans with arrears.

Regarding utility bills, more needs to be done to ensure that investments in improving energy efficiency, which the EU is funding massively through the Recovery and Resilience Facility (RRF), reach low-income tenants and homeowners. This will protect households against energy price hikes by decreasing their dependence on external energy sources, because they require less energy or generate their own.

Housing support should not be seen as separate from other social benefits and services. General social protection, such as a minimum income guarantee, and good access to services such as education and healthcare can help maintain the living standards of people who do not have access to housing benefits yet who feel the pressure of high housing costs.

To guarantee access to accommodation, stable and independent housing should be provided to individuals who are homeless or at risk of becoming so. Housing First policies are effective in doing so but need to be scaled up. About three-quarters of Member States have such schemes in place, but few have the capacity to house more than 1% of homeless individuals in the country.

Innovative Solutions to the Housing Crisis

Addressing the housing crisis requires innovative solutions that extend beyond conventional policy measures. For instance, the National Low Income Housing Coalition advocates for the expansion of the National Housing Trust Fund and the enhancement and increase of resources for federal affordable housing programmes. These measures can help boost the supply of affordable rental units and ensure that low-income households have access to decent, affordable housing.

Another potential solution is to incentivise the construction of affordable homes. This can be achieved through measures such as the Low-Income Housing Tax Credit Programme, which offers tax incentives for developers to construct affordable housing. Additionally, relaxing condo lending restrictions and concentrating on manufactured housing can also aid in increasing the supply of affordable homes.

Moreover, the provision of rental subsidies and eviction prevention measures can protect renters from housing insecurity. Rental subsidies can render housing more affordable for low-income households, while eviction prevention measures can offer a safety net for renters who are experiencing financial difficulties.

Conclusion: The Urgency of Implementing the European Pillar of Social Rights

Europe’s current housing situation calls for the rapid and effective implementation of the European Pillar of Social Rights. The rights directly linked to housing play a pivotal role here. Equally important will be the implementation of the right to access good-quality services and the right to other forms of social protection – these will be key in preventing and addressing housing issues.

In conclusion, the housing crisis in the EU is a complex issue that necessitates a comprehensive and multifaceted approach. Policymakers must consider a range of strategies, from expanding the supply of quality housing and improving energy efficiency to providing personalised support for those facing payment difficulties. By working together, we can create a more equitable housing market that meets the needs of all citizens.