Housing Partnership of the Urban Agenda for the EU

Introduction

In 2016, during the Dutch Presidency of the Council of the EU, the "Pact of Amsterdam" (the Pact) was signed. This pivotal document was endorsed at an informal gathering of EU Ministers responsible for urban affairs on 30 May 2016. The Pact served as the foundation for the Urban Agenda for the EU, a comprehensive multi-level agreement whose aim was to enhance the urban dimension in European legislation and policymaking. Within this agreement, twelve priority themes were outlined. The fourth priority specifically concerns housing, which is the focus of this case study.

The Urban Agenda for the EU has become the overarching governance framework that promotes co-operation at all levels of governance to facilitate the implementation of sustainable urban development policies. Within the framework of partnerships involving voluntary co-operation between relevant stakeholders, each priority theme is addressed by a specific partnership. In this context, the Housing Partnership has been entrusted with a three-year mandate to develop the Action Plan, a comprehensive document based on the results of the partnership’s co-operation. The Action Plan is the result of the three-year partnership and is divided into three parts. The most important part is the twelve actions, which are divided into three groups: “Better Regulation,” “Better Knowledge and Governance” and “Better Funding”. These actions are explained below.

The other themes for these partnerships encompass urban poverty, inclusion of migrants and refugees, air quality, sustainable use of land and nature-based solutions, circular economy, climate adaptation, energy transition, urban mobility, jobs and skills in the local economy, digital transition and innovative and responsible public procurement.

The European Commission (EC) does not have a specific mandate for housing, leaving the development of housing policies and strategies to individual Member States and local authorities. Nevertheless, one of the objectives included in the Pact was "to explore public and affordable housing, state aid rules and general housing policy".

At the EU level, there is a growing demand for housing, yet the supply of affordable housing fails to keep pace with this increasing need. A 2018 report (Fransen et al., 2018, p. 41) revealed that the EU faces an annual shortfall of €57 billion in affordable housing investment. Housing provision varies significantly across the EU Member States, with the global financial crisis causing a reduction in affordable housing investment. This decline has contributed to a surge in housing prices within the market. Thus, the European Systemic Risk Board (ESRB) has issued a cautionary statement to specific Member States, pointing to a possible overheating of the housing market, which could lead to increased vulnerability of the residential real estate sector (ESRB, 2022).

In 2021, more than 10% of the EU population was overburdened by housing costs (Eurostat, 2023). Therefore, national and local authorities urgently need workable policy solutions to make housing more affordable. Furthermore, around 48% of young adults in the EU live with their parents (Housing Partnership, 2018, p. 63), a situation that could have a negative economic and demographic impact across the EU in the near future.

The Housing Partnership's key findings reveal several significant trends: an escalating number of EU citizens across diverse income brackets facing housing affordability issues, housing prices outpacing income growth, a growing fragmentation in the housing market intensifying spatial and social segregation, and a decline in overall investment in affordable housing. The partnership comprised a range of partners with the city of Vienna (Austria) and Slovak Republic as coordinators, and various institutional and academic stakeholders (Housing Partnership, 2018).

Main outcomes of the Action Plan

As outlined in the Action Plan, the Housing Partnership encompasses on three key areas: firstly, a territorial emphasis on cities; secondly, a dedication to affordable housing; and thirdly, a focus on various housing themes.

Actions aiming at better regulation

Over the course of the three-year partnership, a list of twelve actions and recommendations was produced to address the housing crisis.

- Action 1 Guidance on EU regulation and public support for housing – special aim is to provide clear guidance on public support for social and affordable housing in European cities.

- Action 2 Capacity building for the application of state aid rules in the affordable housing sector at a city level

- Action 3 Revision of the Services of General Economic Interest (SGEI) decision with regard to the narrow target group of social housing

Actions aiming at better knowledge and governance

- Action 4 Affordable housing good practice database that proposes gathering of the best practices of the social and affordable housing sector, to foster learning and knowledge exchange on affordable housing provision in European cities

- Action 5 Policy guidance for the supply of social and affordable housing in Europe, aiming to offer guidance for European cities on how to increase affordable housing supply

- Action 6 Exchange programme for urban housing professionals

- Action 7 Monitoring system for affordable housing in the European Union

- Action 8 Exchange on affordable housing at member-state level, by establishing Housing Focal Points and the informal Ministerial Meetings in Housing to allow for continuous exchange at a high political level

- Action 9 Recommendation on improvement of EU urban housing market data, and to establish an EU database mapping housing prices on the subnational levels in the EU

- Action 10 Recommendation on the improvement of EU gender-poverty-energy nexus data, by developing gender disaggregated data and making it available to inform policy development

Actions aiming at better funding

- Action 11 Recommendations on EU funding of affordable housing, aiming to increase the capacity of cities to find funding sources for affordable housing, and inform them of funding options through European investment bank and other funding instruments.

- Action 12 Recommendations on the European Semester and affordable housing, aims to better inform and address the European Semester procedure to reflect housing affordability problems.

According to the Housing Partnership (2018), there are four recommendations by the partnership, and eight recommendations according to the priority fields (Figure 1):

1.  In addition to the European Semester macroeconomic imbalances procedures, more needs to be done to address the different housing affordability situations along the housing continuum and/or to refine the Housing Price Index (HPI) indicator. This is to ensure that the European Semester and CSR process takes into account all housing options, including rental markets in the social/public, cooperative and private sectors, and not just one.

2.  To improve the analytical basis for the housing market assessment in the national reports and Country Specific Recommendations, comprehensive and complete monitoring of all housing properties along the housing continuum should be included, as well as an examination of the geographical difference between areas with low demand and hot housing markets. The situation in cities and urban areas should be particularly monitored as there are important developments there that cause potential financial crises.

3.  Develop affordable and social housing indicators in social scoreboards, including taking better account of the socio-economic situation of EU citizens, for example by combining the revised definition of housing overcrowding with other indicators such as expulsion and poverty rates. The Housing Partnership recommends that the minimum reference threshold for total housing costs when calculating the housing overpopulation rate should not exceed 25% of disposable household income. Member States should formulate policies and strategies at national, regional and local level and set the conditions for achieving these targets based on the principle of subsidiarity

4. It is necessary to promote the use of investment clauses in the European Semester to finance affordable housing to strengthen short-term and existing investments. Furthermore, investment programmes for affordable housing should be interpreted as structural reforms (Housing Partnership, 2018).

Figure 1 shows eight recommendations addressing the significant concern faced by European cities under pressure to secure affordable housing for their population.

The Housing Partnership's 2018 Action Plan specifically emphasizes its commitment to the Sustainable Development Goals. The Partnership maintains that increased investment in housing will directly benefit the construction sector, especially the local and regional SMEs. Furthermore, the provision of more affordable housing will result in higher disposable income for households, enabling them to spend more on education, healthcare or leisure activities. Therefore, the Action Plan assumes that tenure-neutral affordable housing represents a win-win investment.

SDG 11: Sustainable Cities and Communities.

Currently, the majority of the global population resides in urban areas and this figure is expected to rise to 6.5 billion persons by 2050, which would constitute some two-thirds of the total human population. Achieving sustainable development necessitates a substantial transformation in the construction and management of urban spaces. The rapid expansion of cities in developing nations, coupled with escalating rural-to-urban migration, has resulted in the proliferation of mega-cities. Urban regions often concentrate important levels of extreme poverty, posing challenges for national and municipal governments to meet the needs of their growing populations.

Creating safe and sustainable cities entails ensuring access to secure and affordable housing, along with upgrading impoverished settlements. Additionally, it requires investing in public transportation, the establishment of environmentally friendly public spaces, and the enhancement of urban planning and management through inclusive and participatory approaches.

The Action Plan includes an entire section to its commitment to the SDGs, and specifically highlights the connection to SDG 11: “Make cities and human settlements inclusive, safe, resilient and sustainable”:

“As the efforts of the Housing Partnership are focused on improving access to adequate and affordable housing in cities, the work of the Housing Partnership has the capacity to contribute to achieving this goal. Furthermore, SDG target 11.1 is dedicated explicitly to housing” (Housing Partnership, 2018).

The Action Plan refers to SDG target 11.1: “By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums” emphasizing the importance of these goals:

“This is the key SDG target being advanced by the Housing Partnership. Significantly, the New Urban Agenda expands the UN Member States’ commitment to cities and housing in cities. In terms of the Partnership’s focus on housing in cities, two NUA [New Urban Agenda] articles are especially relevant. The first underlines the relevance and importance of the focus on cities considering the overall global trends, while the second sets out broad aspirations related to the realization of the right to adequate housing in cities” (Housing Partnership, 2018).

Finally, the Action Plan addresses market failures in ensuring safety in the housing sector, emphasizing the need for both structural and individual consumer protection. These aspects align with SDG 12, target 12.2 on Responsible Consumption and Production.