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Letter to President of the European Commission on the Fair Energy Transition and Annual Growth Survey

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The 2013 Annual Growth Survey should prioritise Member state policy on ensuring a fair energy transition by proposing to invest into “Nearly zero” housing. A team of Romanian students competed in the European Solar decathlon 2012 with a house they built in 10 days, which would generate a revenue of 1700€ a year for the household from the solar panels installed, and which cost 70.000€, the limit set by the government in its first home programme. For the new housing stock it is possible today to create European response, adapted to our climates, which can also be exported in all EU countries.

Dear Mr. President,

Members of CECODHAS Housing Europe are delivering more than 25 million affordable homes to EU households. Many of them have been providing sustainable neighbourhoods for 100 years or more. Affordable housing is a core pillar of European social model but it also has been a key economic growth driver accompanying European industrialisation.

After the Second World War, there have been consensuses to rebuild the countries and the economies by investing in social, public and cooperatives housing answering the need of a demographic boom and internal migration. Today, the impossibility for households to find suitable, decent and affordable homes has become again one of the main obstacles to employment mobility, a massive constraint on household’s budget hampering their ability to invest in their own future and an economic destabilizer.

Beside the clear support of the European Commission to ensure a fair energy transition by opening structural funds to refurbishment of housing, which will not only prepare our society for the future, decrease energy dependency and poverty, but also create local jobs, we, affordable housing providers, believes that it is time for a housing supply shock.

In the latest Eurostat data available, 8 million people lived in 2010 in situation of material deprivation. Since the beginning of the crisis, more than 300.000 Spanish households have been evicted from their homes. Housing needs in Europe are large, and housing solutions exists.

AGS 2013 should prioritise Member state policy on ensuring a fair energy transition by proposing to invest into “Nearly zero” housing. A Romanian students team competed in the European Solar decathloni 2012 with a house they built in 10 days, which would generated revenue of 1700€ a year for the household from the solar panels installed, and which cost 70.000€, the limit set by the government in its first home programme. For the new housing stock it is possible from today to create European answer adapted to our climates, which can also be exported in all EU countries. We welcome the EU strategy for sustainable competitiveness of the construction sector which we hope will help in identifying the affordable and quality solutions for the future housing developments. Countries have also been adversely affected by an over-reliance on the construction sector. Any new employment initiatives in this area must be accompanied by an appropriate re-skilling programme aimed at creating sustainable employment opportunities.

It is crucial to ensure that new housing supply is closely linked to evidenced local demand. A high degree of local and national control is required over investment decisions but access to long-term finance and pooling investment demands should be supported by EU institutions. The European Commission should propose that the EIB and the CEBii enlarge their current social investment portfolio such as social housing (the recently agreed project bonds could be extended to other investment). Providers of affordable housing have currently difficulties to access credit due to the banking crisis and EU financial institutions and tools can be better used to facilitate long-term investment in that sector.

We need more homes and we need affordable homes. Cost is a crucial issue when deciding to build or not and will determine the cost of living for the future residents. We hope therefore that the strategy for the construction sector will put pressure on the construction industry to be more cost-efficient and competitive. In addition, providing more land to develop affordable housing (by reducing the transaction costs, and tax on land) and simplifying the planning process and building rules will release the potential for providers to answer the housing demand. We have been calling for more neutrality of the tax policy between tenure, as for two decades in most of the European countries; tax exemption on mortgage interest has been widely implemented. But in the transition towards a tax policy tenure neutral, is it crucial to ensure that the cost to produce affordable housing are not increased.

In some EU Member States, the supply of housing is not lacking. It is part of the banking crisis. Even if a substantial part of the housing stock is inadequate because badly located far from any employment opportunity or not answering the needs in terms of size and facilities, part of the current “ghost estates”, in the banks’ balance sheets, can become the social rental stock of the future. Instead of saving the banking sector independently from solving social crisis, there are examples of positive ways to work with banks to support their role in the housing market. This could involve transfer the management of housing stock to not-for-profit actors that would (with state guarantee of housing benefit payments) rent it, or promoting new housing products such as equity share or incremental purchase as part of mixed-tenure communities. “Mortgage to rent”iii schemes have been part of the solution for the UK and Irish housing crises and could be promoted elsewhere.

This is the main advantage of the European Economic process for us: to learn from good practices of other countries, the exact contrary of the way it has been designed so far with recommendations top-down being proposed/imposed to Member States.

For this new process to deliver cohesion, social, territorial and more support to the European project, we believe that the entire governance needs to be revamped. It should include the stakeholders in the process but most importantly should leave the national institutions and actors to define their policy to reach objectives co-decided at European level by the Parliament and the Council and in fully transparency with all relevant stakeholders. For example in the recommendations 2012 to Sweden, the Commission criticizes the stringent rent regulation. It is important to reiterate that Sweden does not have any rent regulation but a system of collectively negotiated rents with an opportunity for review by a court. It has been 40 years since Sweden abolished government rent regulation in favour of negotiations between the parties in the market. Beside that is not for the Commission to decide the Member States rent setting systems, involve the relevant partners in the process would have helped to understand the Swedish system and propose real solution.

We fully support the European Commission in its aim to have a more stable economy and acknowledge that the crisis is shaking our joint European project. We also recognized that the economic governance process will evolve with the time and only started properly this year. This is why we would like to contribute positively to the future proposals especially for the Annual Growth survey 2013 which we hope will include more concrete proposals, as set above, on how to use EU instrument to foster fair energy transition and supply more affordable homes; both priorities have the potential to create the missing jobs in EU while ensuring the wise public spending by having a real long-term sustainable strategy.
Yours sincerely,

Kurt Eliasson

President of CECODHAS HOUSING EUROPE

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