European Property Federation

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<PRIVATE REAL ESTATE'S POSITION: On a European Pillar of Social Rights

In a common position addressed to the European Commission, the European Historic Houses Association (EHHA), European Landowners’ Organization (ELO), European Property Federation (EPF) and International Union of Property Owners (UIPI) considered that the Commission’s preliminary outline of a European Pillar of Social Rights is well drafted, depicting the social importance of the housing sector, the challenging reality as well as the need for adequate and secure housing, while striking the right balance in protecting the rights of the different actors of the sector and respecting the current EU acquis.

Extracts of Common Position on a European Pillar of Social Rights

Ensuring a level playing field in the housing sector

The preliminary outline of the EU Social Pillar rightly states that "Access to social housing or housing assistance shall be provided for those in need (..)". We welcome this statement as it respects the present acquis in the field of State aid.

Successful promotion of access to housing can only be achieved if a level playing field is created, ensuring that all market players providing such services have the same opportunities. For that, it is of paramount importance that the Commission's current notification exemption for services of general economic interest remain in place unchanged. Only if that exemption is granted exclusively to "social housing for disadvantaged citizens or socially less advantaged groups, who due to solvency constraints are unable to obtain housing at market conditions[1]" will it be possible to avoid serious distortions of competition caused by social housing companies competing with private landlords for middle-income tenants.

The only way forward is by developing a policy framework that incentivises all market players toward the affordable housing goal.

[1] Recital 11 of Commission Decision 2012/21/EU on the application of Article 106(2) TFEU to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest states.

Removing restrictions to supply in the housing sector and rental market distortions

We agree with the statement of the preliminary outline according to which "restriction to supply in housing sector and rental market distortions are contributing to the lack of availability."

In housing, despite local particularities, there are only so many regulatory 'solutions' to the social problems caused by housing shortages. They have all been tested many times in many countries over a century. Policies designed to provide immediate relief to pressing social problems have created major bottlenecks and inefficiencies that have remained even though society and its problems have evolved. Yet, successive governments tinker with outdated policies supported by entrenched special interests without seeking broader solutions adapted to a modern society and economy. In many countries, housing policy and in particular counterproductively detailed regulation and control of rental markets have become a major, systemic contributor to national macroeconomic imbalances, notably to budget deficits, further impeding labour mobility.

Therefore, we consider that EU Economic Governance is a historic opportunity for European and national authorities together with market actors to discuss common problems and solutions on the basis of an 'inconvenient truth':

  • complex and multi-level rent regulation of housing negatively affects the interest of investors in investing in residential properties;

  • causing an increasing drain on the exchequer as lack of income for private investors causes a maintenance and modernisation backlog in the rent controlled sector, giving rise to a growing need for public subsidies for urban renewal, energy-related improvements, etc.;

  • which creates a self-reinforcing effect by which the controls and regulation increase the need for further government intervention and support.

Striking the right balance between tenant and landlord rights to the benefit of the most vulnerable

… national policies should rather put a stronger emphasis on prevention of vulnerable households and homelessness. Preventive means could include the recognition of a threat of homelessness as early as possible and no later than at the eviction notice. Such measures should lead to an earlier duty to act for public authorities. This could increase the chances of averting homelessness as mediation between parties and assistance with debt management could be employed. In effect, this will lead to taking the strain off of overburdened courts, ensure adequate support for tenants and increase the much-needed confidence of landlords for letting out property to riskier tenants.

For the full text of the common position, see epf16-125 of 10.12.2016