On Tuesday 12 May, the Cyprus Presidency of the Council of the European Union convened an informal ministerial meeting on housing, focusing on the need for simplification, particularly in the construction sector, and on financing tools and mobilising investment.
“Today’s meeting enabled an open, constructive and timely exchange of views on housing, an issue at the heart of human dignity, social cohesion, and a fundamental pillar of the European social model”, commented the Cypriot Minister responsible, Constantinos Ioannou, alongside European Commissioner Dan Jørgensen.
“Ensuring access to adequate, affordable, and sustainable housing is not only a social priority, but also a key condition for economic growth and mobility, particularly for young people and workers across Europe”, he added. “The central focus of our discussion was the urgent need to increase housing supply. At the same time, we must address administrative complexity which continues to delay new developments and renovations”.
The decline in housing investment in Europe, fuelled by rising construction costs, high interest rates and economic uncertainty, has further reduced supply and exacerbated affordability problems. Remedying these imbalances requires targeted policy interventions, stronger incentives, and closer cooperation between the public and private sectors, he explained.
Innovation was also a central point of discussion. “New construction methods, such as modular and off-site building, along with digital tools like Building Information Modelling (BIM), can significantly accelerate housing delivery, reduce costs, and to improve transparency. At the same time, investing in sustainable construction materials and integrating circular economy principles are essential to meet our climate goals”.
On the investment side, “€10 billion will be additionally mobilised from the EU budget this year and next while partner financial institutions have pledged to mobilise €375 billion by 2029”, recalled the Commissioner for his part.
“And crucially, we are working on the pan-European investment platform to make sure we have the right financing instruments to support affordable and social housing”.
The Commission will be presenting a simplification of the housing system in 2027, but the next “major step will be a proposal to address the pressing issue of short-term rentals”, said the Commissioner. “Short-term rentals have almost doubled between 2018 and 2024. In some neighbourhoods and tourism hotspots, the share of short-term rentals can represent up to 20% of the housing stock”.
This legislation will provide local authorities with a range of tools to limit the negative effects of short-term rentals in housing shortage areas.
In a preparatory note, the Cyprus Presidency pointed out that the European Commission estimates that closing the housing and renovation gap would require around €150 billion of additional investment per year throughout the Union.
“This lack of investment is particularly glaring in the following areas: social and affordable housing, renovation and decarbonisation of existing buildings, innovation and digitalisation of the construction value chain, and fast-growing urban areas, where land and construction costs are rising most rapidly and the elasticity of housing supply is low, particularly in metropolitan areas”.
The limited budgetary room for manoeuvre of certain Member States, the tightening of financial conditions and regulatory uncertainties continue to hold back public and private investment, the Presidency has indicated.
On the subject of simplification, the Presidency explained that housing construction is governed by rules at several levels, covering spatial planning, environmental protection, energy performance, heritage conservation, and citizen participation. “Although these guarantees are essential, their cumulative effect and their often uncoordinated application can considerably delay, or even prevent, the completion of projects”.
Administrative complexity “generally weighs more heavily on small and medium-sized developers and on individual households undertaking construction or renovation projects”.
In this context, administrative simplification can play a decisive role in speeding up the construction of affordable, sustainable, and decent housing or making it easier for households and homeowners to undertake renovations and energy efficiency improvements.
But simplification must aim to simplify processes, improve efficiency and predictability, “without weakening substantive standards or compromising quality”, concluded the Presidency. (Original version in French by Solenn Paulic)