You don’t expect to see a picture of Margaret Thatcher on the wall when you walk into the office of the European commissioner for housing, given Dan Jorgensen is a Danish social democrat.
The photo shows the former right-wing UK prime minister meeting Denmark’s first EU commissioner, Finn Olav Gundelach, after the two countries joined the union in the 1970s. The chic green couch the pair are sitting on in the photo is still in the Berlaymont, where the EU’s executive body is based, all these years later.
“She seems to be admired for how strong she was, probably I don’t agree with that many of her policies,” Jorgensen says, after drawing attention to the photo of Thatcher.
From Athens to Dublin, national governments are struggling to reverse a chronic shortage of housing supply, that has left many unable to buy a home and paying higher and higher rents in the meantime.
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The European Commission has no real powers - known as competences - to legislate in the area of housing, so it was not a topic that featured in the discussions of those working inside the EU lawmaking machine.
That has changed in the last year. Finding ways to help governments address a continent-wide housing crisis is suddenly high on the agenda of commission president Ursula von der Leyen and MEPs in the European Parliament.
Jorgensen is the first EU commissioner whose portfolio covers housing (he also looks after energy policy, where the union plays a bigger role).
“For decades the common understanding has been that this is really an area where the EU competence is extremely limited and I would like to challenge that,” the centre-left Danish politician says.
Jorgensen draws a parallel with health policy, another area where the EU’s powerful executive body has limited scope to propose laws or reforms.
“When Covid came I think we were all very, very happy that we had the European Union to help us in that very hard crisis,” Jorgensen says, a reference to the commission’s role negotiating the purchase of vaccines for the entire 27-state bloc.
So what can the EU do to help solve the housing crisis?
An affordable housing plan, which is expected to propose easing certain EU-level restrictions on governments subsidising housing projects, will be published by Jorgensen in December.
The commission’s state-aid rules are meant to stop governments from pumping money into national industries or individual companies, giving them an unfair advantage in the EU market.
There are exemptions to those competition rules, to allow states to finance public and social housing.
State intervention for affordable housing is more of a grey area. Such projects typically involve governments subsidising developments where houses or apartments are reserved for buyers on lower incomes, who would not qualify for social housing.
There is a valid perception the existing EU rules were “restrictive”, says Christopher McMahon, an adjunct assistant professor in Trinity College Dublin, who specialises in state aid law.
“The EU isn’t in the business of providing housing itself, that’s what national governments do,” he says.
The Berlaymont was shaping up to shift its stance on state aid, an acceptance competition rules were getting in the way, he says. “It’s an example of the commission responding to the fact that they are the blockage,” McMahon says.
Loosening those restrictions on state-subsidised housing will only fix a small part of the problem.
An EU report studying the housing crisis, published last month, pointed to rising construction costs as one of the main factors holding up building.
Europe’s construction industry, in Ireland and other states, is still carrying a hangover from the financial crash. There are the shortages of skilled tradesmen and financing problems. Then energy costs and the price of building materials shot up after Russia’s full-scale invasion of Ukraine.
Europe-wide research shows house and apartment prices have increased by about 60 per cent over the last 10 years, the report said. The cost of building homes increased by almost the same rate during that period.
The report, written by EU officials tasked with policy research, said the residential construction sector had “never fully recovered” from the huge drop in home building after the global financial crash.
Into that gap stepped institutional investors and property funds, who now play a much greater role in the housing market.
While those institutional investors brought an injection of money into the sector, a lot of that went into building luxury apartments, student accommodation and co-living housing for young professionals, the research said.
The report concluded the prospect of institutional investors and their private capital addressing the shortage of affordable homes “seems limited at best”.
Predictably, differing opinions about how to get shovels in the ground divide along political lines.
Those on the left believe a big pot of EU money needs to be sourced to kick-start building. Their rivals to the right want to see the time it takes developers to secure planning permission and permits sped up, environmental rules scaled back, and taxes paid by builders lowered.
Borja Giménez Larraz, a centre-right Spanish MEP, says the focus should be on boosting construction by paring back “excessive regulations and bureaucracy”.
Giménez Larraz, a member of a new European Parliament committee on the housing crisis, says it has been taking too long to approve planning applications and permits.
The EU should consider revising a range of its laws, such as the Habitats Directive protecting wild species, the Nature Restoration law reversing biodiversity loss, and new energy efficiency regulations, he says.
Tougher anti-squatting laws - a live issue in Spanish politics - are also needed, he says. A very low tax rate for property developers building public or affordable housing would help too, Giménez Larraz says.
“This will just complement the measures that have to be taken at national level,” he adds.
Labour’s Dublin MEP Aodhán Ó Ríordáin favours loosening state aid rules and central bank debt restrictions on local authorities.
Something needs to be done about the “bizarre situation” where homeless families were forced to live in hotels in Dublin, at the same time tourists were staying in homes let out on Airbnb or similar platforms, Ó Ríordáin says.
Authorities in Barcelona plan to effectively ban Airbnb and other short-term stay platforms from operating in the city by 2028, though Ó Ríordáin says that may be a step too far. The Brussels political system should help governments boost housing supply, even if that meant “testing the boundaries” of the EU’s remit in the field, he says. “If we’re not talking about housing then we could be seen as not being attuned to the needs of European citizens,” he says.
A recent European Council summit of the 27 national leaders discussed the housing crisis, the first time the issue has been on the agenda of the union’s highest decision making forum.
Speaking on his way in to the summit, Spain’s left-wing prime minister Pedro Sánchez floated the idea of a legal freeze to stop housing being bought up for “non-residential” purposes.
EU states should be given “levers” to pull in a scenario where tourism was massively driving up property prices in certain cities and regions, Sánchez said.
“Housing is not a competence of the EU, but it is important that we talk about it,” says one senior Brussels-based diplomat. The source predicted plenty of the focus at EU level would be on cutting red tape seen as holding up development.
Jorgensen has actively been canvassing national governments for their thoughts, correspondence shows. In a March 18th letter to all housing ministers, the EU commissioner asked for “solutions” they could put forward to address the housing crisis.
European and national politicians need to work together to take on the structural causes of the problem, Jorgensen wrote.
The correspondence, released in response to a Freedom of Information Act request, proposed housing ministers and the commissioner meet regularly to discuss areas of possible co-operation.
In a recent interview with The Irish Times and other European media outlets, Jorgensen said the current moment was a chance to “redefine” the role the EU played in housing.
Thatcher, an opponent of deeper European integration who fiercely resisted efforts to hand any extra powers to officials in Brussels, would have had a lot to say about that. Jorgensen is lucky the photo on his office wall can’t talk.
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