10 million new homes needed in Europe

10 million. That’s the number of new homes Europe needs in the coming years to tackle the housing crisis. A lack of access to housing has become a major problem across the EU, affecting people’s lives and stifling our Union’s competitiveness. We are not building or renovating enough, and we are not doing it quickly enough. The European Parliament set up the first-ever special committee on the housing crisis, with one task: to draw up Europe’s first roadmap to urgently address this challenge.

The resulting report, adopted by a large majority in the European Parliament last March, sets out a clear path: strengthen cooperation with national, regional and local authorities, boost the construction and renovation of housing, improve access to public and private funding, develop targeted policies for those most in need and improve data sharing.

The real challenge is to move from multi-level coordination to action and tackle the root of the problem: the housing shortage. There is an urgent need to resolve this massive shortfall of 10 million houses. The figures simply do not add up. It is inevitable that prices will come under strong upward pressure. The Parliament’s report not only sets out the causes but also offers concrete measures to reverse the situation.

The EU has tools at its disposal. We know that it is essential to drive forward a process of regulatory simplification. Excessive bureaucracy is suffocating the construction sector. We must prioritise the Housing Simplification Package and the Construction Services Act. We need to make land available. We must speed up the permitting process. It is unacceptable that planning permission applications can take up to two years before a decision is made. The tax burden must be reduced. We propose a reform of the VAT Directive to allow for the application of a super-reduced rate. We need to drive innovation in the construction sector: industrialisation, modular or prefabricated construction can help solve the problem. Legal certainty is essential for the property market.

If we are serious about fixing the deficit and building 10 million homes, we must mobilise capital. Public funds will never be sufficient. Attracting private investment is vital. We must ensure that credit reaches small and medium-sized construction firms. We must promote public-private partnerships. European funds have an important role to play, via the European Investment Bank and the announced pan-European housing investment platform. 

The Parliament is clear: we must act on supply and funding. The European Commission has considerable scope for action. So, what’s missing? Political will, sound judgement and the determination to deliver. The Commission’s first proposal to tackle the housing crisis misses the mark. On 9 September, the Commission presented an initial package of measures including a series of recommendations to Member States and a legislative proposal on affordable housing. Among the recommendations, there are some worth highlighting: speeding up planning permission and licensing processes, reducing construction times to 60 days, making it easier for young people to access housing, and making better use of European funding. It sounds good, but for the moment, that is all they are: recommendations.

However, the second proposal in this package, the so-called Affordable Housing Act, is an utter disappointment. It aims to regulate short-term tourist accommodation without clarifying how that will help solve the housing problem but instead proposes restrictions on the purchase of second homes or land not used as a main residence. Such ideas directly contravene some fundamental principles of the European project, such as the protection of private property, free competition and the market economy. And not only that: it is a measure that has already been tried in other countries: France and Switzerland are two examples. According to various studies, such measures may partially curb prices, but they also have negative effects on employment and economic activity. This can hardly be the best practice response to the problem before us.

The Commission’s proposal seems to stem more from ideological prejudice and political interests than from a genuine desire to resolve the housing problem. European Commissioner Dan Jørgensen and Commission Vice-President Teresa Ribera are mistaken in their approach. It seems that they are attempting to replicate certain aspects of the Spanish Government’s housing policy, which favours interventionism, caps prices, deters investment and reduces supply. These are measures that make the crisis worse, and that’s why they’ve already been rejected by the European Parliament in finalising its report.

We will not solve Europe’s housing shortage by regulating its effects, as the political Left suggests. We need to generate growth and prosperity. We urgently need to attract investment, not drive it away. To do that, we need to simplify regulations, cut red tape, lower taxes, encourage innovation and attract funding, both public and private. 10 million new homes: we have the plan to deliver; now we need the determination.