State aid for housing and the new DAEB decision: what exactly is changing?

At the beginning of January, the new DAEB decision came into force. This decision replaces the 2012 decision and has consequences for the way in which public authorities are allowed to support housing construction. The DAEB decision makes it clear that not only social housing, but also affordable housing (for middle incomes) can be classified as a Service of General Economic Interest (DAEB). A government may grant compensation for a DAEB – this is exempt state aid, which does not first have to be notified to the European Commission. However, the aid must comply with the conditions set out in the decision.

It is important for municipalities, housing associations, developers, and other parties involved to be well informed about these possibilities and conditions for providing support. The decision creates more financial scope, but also sets new requirements in terms of target group definition, quality, duration of deployment, and transparency. The most important changes for housing construction are outlined below.

Stricter requirements for social housing

The most important changes for social housing are:

1. The period during which social housing must be maintained as such must, in principle, be at least 20 years. Previously, no such period was prescribed.
2. The compensation may also be used to cover the costs of new construction and the purchase of land. Previously, this was not explicitly regulated.

Affordable housing as a new category

The DAEB decision mentions affordable housing as a separate category that may be classified as DAEB. Although this is not explicitly stated, it also makes it possible to support DAEB aid for housing for (certain groups of) middle-income earners. The most important conditions that apply are:

1. This concerns households that, as a result of market outcomes and, in particular, market failure, do not have access to housing on affordable terms.
2. The Member State (probably: the Ministry of Housing, Spatial Planning, and the Environment) must determine the need for affordable housing, as well as the indicators and benchmarks used.
3. Housing prices or rents for affordable housing must be below market prices and must be determined on the basis of transparent criteria.
4. The period during which affordable housing must be maintained as such must also be at least 20 years in principle.

Procedural changes

The decision also includes procedural changes to reduce the administrative burden. The most important ones are:

1. The mandatory reference to the DAEB decision in decisions imposing DAEB on companies has been removed.
2. The frequency of checks for overcompensation will be reduced from once every three years to once every five years.
3. If the company (almost) exclusively carries out DAEB activities, ex post checks are not necessary at all.
4. From January 1, 2028, there will be a central transparency register, in which aid exceeding €1 million per company per SGEI will be recorded.

What now?

For affordable housing, we are waiting for further criteria from the national government. Once these have been announced, it will become clear how much more scope there actually is to support affordable housing, even if social housing is not involved. In practice, we will have to wait until the national government has provided further clarity on this matter.

The maintenance period is an important factor for social housing. Although there are exceptions, 20 years is the rule. This is longer than is often applied in practice at present.

Existing DAEBs are subject to a two-year transition period. Existing social DAEBs, including those for social housing, are subject to additional protection: they remain valid until the end of their term.

During our Round Table on February 5, we will discuss these new regulations and their practical implications in detail. The maximum number of registrations has already been reached, but for more information, please contact Paul Heijnsbroek and Gijs van Midden.