The European Commission has adopted new rules aimed at enabling increased State aid for housing construction. Under the new framework, the provision of two categories of housing is classified as so-called services of general economic interest (SGEI), making it easier for Member States to grant State aid to such housing.
As a general rule, State aid granted by EU Member States to undertakings is prohibited under the Treaty on the Functioning of the European Union (TFEU). In order to be permitted, such aid must normally be notified to and approved by the European Commission (the Commission). However, aid granted for the provision of services of general economic interest may, under certain conditions, be exempt from this prohibition and therefore does not need to be notified to the Commission.
The Commission has now adopted a new decision on services of general economic interest. The decision provides that the provision of two categories of housing is to be regarded as an SGEI: social housing and affordable housing.
Social housing refers to housing for socially disadvantaged persons who are unable to obtain housing on the ordinary housing market. Affordable housing refers to housing for households that are not considered socially disadvantaged but are nevertheless forced to pay an unreasonably high share of their income for adequate housing on the ordinary housing market. In assessing whether housing costs are affordable, factors such as the proportion of household income spent on housing, household size and mortgage costs are taken into account.
State aid for these categories of housing may be granted for, inter alia, the construction of new housing, the acquisition of properties or apartments, renovation, adaptation for elderly or disabled persons, environmental or climate-related measures, and property management. In order for such aid to be permitted, certain conditions must be met:
In addition, all undertakings must have access to aid on equal terms, and, to avoid market distortions, rents may not be set below what can be considered an affordable level.
Under the new rules, State aid may be granted to social housing and affordable housing without prior notification to the Commission, provided that the conditions set out in the decision are fulfilled. The fact that it is now easier for Member States to grant State aid makes it highly likely that we will see an increase in housing-related support measures going forward.
The new State aid rules entered into force on 8 January 2026 and constitute a first step in the European Affordable Housing Plan, adopted by the Commission on 16 December 2025.
With the aim of further increasing investment in housing construction, the Commission has proposed several new EU-level investment support measures targeting private investment. Proposals relating to such support are expected to be presented from the latter part of 2026 and during 2027. Certain elements of these investment schemes will be linked to compliance with quality and sustainability guidelines under the New European Bauhaus initiative.
The Commission has also announced a broader housing construction strategy. Within this framework, proposals are expected during 2026 for new legislation to simplify and digitalise permitting processes within the EU and to harmonise requirements for cross-border construction services.
Finally, the Commission has announced forthcoming legislation containing more detailed rules on how Member States are to regulate short-term rentals. This proposal, which will complement the Regulation on the collection and sharing of data on short-term rentals entering into force in May this year, is expected to be presented before the end of 2026.
Martin Johansson
Partner / Advokat
EU, Competition & Regulatory
Isak Lefvert
Associate
EU, Competition & Regulatory
