Intending to facilitate affordable housing investments, the European Commission opened a public consultation on the revised Service of General Economic Interest (SGEI) Decision.
The SGEI allows governments to support social housing providers without breaching competition rules. However, this exemption is limited to housing for disadvantaged or socially excluded groups, excluding middle-income households.
The proposed Decision sets new rules for affordable-housing SGEIs to prevent market distortion, provide legal clarity to member states, and allow adaptation to national and local housing contexts.
Utrecht was one of the municipalities that contributed to the consultation. Eurocities has talked with Dennis de Vries, alderman in Utrecht, responsible for Housing, Youth, Neighbourhood-Oriented Work, Vocational Education, and Real Estate, to know more about the current housing situation in the city.
“Utrecht’s primary motivation [in contributing to the consultation] was to support the changes in EU state aid rules so that cities can better respond to the housing crisis,” says de Vries. He adds that, as housing is mainly a national competence, the EU should leave implementation to member states and their regions to make state aid rules work for the national and local situation.
Can you walk me through the current State Aid situation in the Netherlands and how they have impacted Utrecht’s approach to affordable housing?
“The Netherlands has long been recognised for its robust social housing system. Housing associations (non-profits) manage around 75% of the country’s rental housing stock. In 1995, these associations became financially independent, funding operations through rental income and asset management. However, this independence led to mission drift, with some associations engaging in speculative ventures.
Even though housing is mainly a national competence, some structural measures can be taken at the European level to make housing more affordable, available and sustainable.
In response to scandals, the government, combined with EU state aid rules, introduces tight controls, such as associations having to separate commercial and social activities, and strict income-based allocation rules being enforced. This led to a shrinking social housing sector, spatial segregation, as middle-income groups were pushed into the private market, and a loss of the unitary housing model, where social and private housing coexisted competitively.
How do you navigate that? From your perspective, what changes to state aid rules would most support local affordable housing development?
“State aid in the Netherlands is governed by EU regulations, particularly the SGEI Exemption Decision 2012, excluding middle-income households from accessing affordable housing support.
In the Netherlands, we have the Waarborgfonds Sociale Woningbouw (WSW system) in place, which has helped housing associations access affordable financing since the 80s. It ensures loans that housing associations take out to build, renovate, or maintain social housing, and this reduces the risk for lenders, allowing associations to borrow at lower interest rates.
By revisiting state aid rules, it will also be possible for housing corporations to use this system for middle-income housing.”
How could the EU better support cities, then, in using their local competences to address housing shortages? If you could suggest one key change at the national or EU level, what would it be to empower local housing initiatives?
“Even though housing is mainly a national competence, some structural measures can be taken at the European level to make housing more affordable, available and sustainable. The Parliament is therefore working on a report on the housing crisis, and the European Commission is preparing the Affordable Housing Plan that we expected for the beginning of 2026. I see the following changes as crucial:
- Fast expansion of state aid rules for affordable housing, as previously discussed.
- Public investments for affordable housing and healthy urban living: In Utrecht, our leading ambition is healthy urban living. However, financing affordable housing and providing sufficient public spaces and amenities is a big financial challenge. The national government and the EU can help by creating a dedicated funding line for housing that integrates social, environmental, and urban planning aspects. A way of doing this is improving EIB financing conditions, for example, by extending the duration of loans to at least 50 years (like with infrastructure), offering loans at minimal interest rates with EU support to subsidise interest costs if needed.
Cities will struggle to function if we cannot offer affordable housing for residents to live and start families.
- EU regulation that supports affordable and sustainable housing and a level playing field: By implementing legislative packages, sustainability and innovation can be ensured, stimulated or scaled up. The EU can help governments and housing developers by setting the standard and giving the market a clear growth path (building regulations) with increasingly ambitious and achievable goals. By creating a level playing field, costs can be reduced and free-rider behaviour can be limited. To illustrate, at the moment, a Dutch commission is advising on reducing environmental legislation in order to accelerate the construction of housing. We foresee that adapting these national regulations will lead to housing of a lesser quality and a decreased healthy living environment, and does not contribute to developing within the planetary boundaries.”
What are the biggest challenges Utrecht faces in implementing affordable housing policies?
“Firstly, Utrecht’s population is expected to grow from 350,000 to around 455,000 in the next 20 years. This growth puts immense pressure on the housing market. There’s also little land available for new development, so most growth must be accommodated within the existing urban area.
Secondly, over the past decade, the share of social housing dropped from 35% to 32%, and affordable homeownership fell from 19% to 10% in just four years. Also, the average waiting time for social housing is about 11 years. In 2023, there were about 2,000 applications per available social housing unit, up from 700 in 2020. Due to municipal efforts, the supply of mid-priced rental housing increased from 11% to 16%. Meanwhile, demand (especially among young people and vulnerable groups) has soared. Both rental and purchase prices have become prohibitive for many, especially for students, young professionals, and middle-income families.”
The national government and the EU can help by creating a dedicated funding line for housing that integrates social, environmental, and urban planning aspects.
How does Utrecht balance housing affordability with sustainability goals?
“In Utrecht, we try to be an example for sustainable developments with attention to affordability, sustainability and amenities. We invest in green roofs, façade gardens, and rainwater management to help mitigate climate risks. Our new housing projects prioritise energy efficiency and sustainable materials, whereas affordable housing developments are linked to public transport and cycling infrastructure to reduce car dependency.
Furthermore, we consider shared housing an important contribution to addressing the housing shortage. New construction alone cannot solve the issue; more people also need to be accommodated in existing homes. To achieve this, we are implementing various measures, such as allowing up to three individuals to share a home without permit, we further promote shared housing by collaborating with housing corporations and other partners, we encourage the development of high-quality shared housing concepts in new construction projects, we are relaxing the rules for splitting up so that larger homes can be used by more households. Also, we are testing building on top of buildings; however, projects are often small, which makes it more difficult for housing corporations to make it financially work.”
Are there innovative housing projects in the city that could serve as a model for other European cities?
“One policy change I would like to highlight is our promotion of housing cooperatives. We have lost this tradition in the Netherlands over the last decades, but recently we have started again with promoting this concept because it can ensure in their statutes that homes remain affordable forever, they strengthen social cohesion in neighbourhoods, for example, through shared spaces or support for urgent housing seekers, and residents have ownership over their living environment.
We actively encourage housing cooperatives by making available at least two locations per year, encouraging groups to register for available plots and participate in tenders. Also, initiatives can receive compensation and assistance in setting up their cooperative and realising their dream.
We’re exploring a leasehold model where middle-income households can buy a house and receive a discount on the leasehold based on their income and assets.
One other initiative we are now working on is long-term affordable ownership. In Utrecht, we see that the share of affordable owner-occupied homes has dropped from 19% to just 10% in four years, and this is expected to decrease further. Also, prices have risen much faster than average incomes (200% in 12 years), making it increasingly difficult for first-time buyers and middle-income families to purchase a home. To this end, we’re exploring a leasehold model where the middle-income households can buy a house and receive a discount on the leasehold based on their income and assets, and so buyers with a low-middle income can purchase the property. In addition, we stipulate in the leasehold contract that the property must be resold to the target group. By doing this, we keep the houses available for the middle-income population. I am very happy with this new model; it’s a big step in keeping housing available for middle-income households in the long term.”
De Vries also emphasised the importance of Housing First policies and called for a more inclusive definition of public interest in housing policy.
In 2025, Utrecht published a policy document on housing, recognising citizen engagement as an important aspect. “Especially the unheard sounds particularly interest me, for example, the homeless or inhabitants in a vulnerable position,” says de Vries, “because as I see it, homelessness is a housing problem.”
The Vries states that he also feels grateful that housing is now on the EU agenda. For him, it is a recognition of cities and proves the urgency of the matter. The EU can “use our knowledge, help us tackle this complex problem,” he says. “Cities will struggle to function if we cannot offer affordable housing for residents to live and start families.”
The European Commission is expected to adopt the draft decision by the end of 2025.
