Thanks to the new SGEI exemption decision, the public sector can more easily promote affordable housing for middle-income households. With the new version of December 16, 2025, the European Commission is expanding the scope of application and enabling compensation for the provision of affordable housing as a service of general economic interest (SGEI). Corresponding subsidies can therefore be granted without a complex notification procedure.
With the European Affordable Housing Plan, the European Commission is pursuing the goal of improving access to affordable housing in the EU and has amended the SGEI exemption decision to this end. In addition to social housing, the exemption from certain subsidies also facilitates the public financing of affordable housing for middle-income households. The new SGEI exemption decision (2025/2630) from December 16, 2025 replaces the previous decision from 2011 and came into force on January 8, 2026.
What changes does the new SGEI exemption decision for housing provide for?
Previously, only aid for social housing on the basis of an entrustment act was exempt from the notification and approval requirement. However, this only included housing for disadvantaged households or socially vulnerable groups who do not have the means to obtain accommodation on the open housing market.
Now an exemption is also possible for “affordable housing”.
What does affordability mean?
The EU Commission leaves the definition of affordability to the member states. When housing is affordable is to be determined by the respective authority at national, regional or local level on the basis of objective indicators. For example, the ratio of rent to income or the annual income required to buy a home can be used. The geographical scale to be taken into account here depends on the scope of the public funding in question and can be based on national, regional or local circumstances. The housing-related energy costs should also be taken into account. Social and affordable housing can also be realized in mixed projects with non-subsidized housing in the interest of inclusive neighborhoods. However, proper segregation of accounts is required to prevent cross-subsidization.
Who is the target group for affordable housing?
Who has access to affordable housing is primarily determined by household income compared to housing market prices. However, other circumstances, such as non-existing home ownership, may also be taken into account. Preferential access can be granted to people who typically have difficulties accessing the housing market, such as people with disabilities, senior citizens, students and single parents. In this context, privileged treatment can also be given to occupational groups of particular social importance (e.g. police, firefighters, teachers, social and childcare workers, nursing staff, etc.).
What compensation can now be granted without notification?
Compensation for the provision of affordable housing is eligible for funding. These can include the investment costs for new construction, the costs for the acquisition, conversion or refurbishment of apartments as well as adaptation measures with regard to accessibility requirements, environmental standards or climate resilience. If necessary, compensation can also be paid for operating costs. However, the amount of compensation may not exceed what is necessary to cover the costs of provision, including a reasonable profit (exclusion of overcompensation).
What requirements must be observed when entrusting?
In addition to the existing requirements for entrustment, competition must also be maintained in the area of affordable housing. Granting authorities must therefore ensure equal access for providers who are able to provide it. In this respect, the entrustment of an SGEI for affordable housing will regularly take place in the course of a support program with predetermined conditions of use or a competitive procedure. Details of the definition and determination of affordable housing and the compensation can be found in the annex to the SGEI exemption decision.
What new opportunities are there for public housing promotion?
The extension of the SGEI exemption opens up new opportunities and fields of activity for the public sector as well as for municipal, private or non-profit housing companies.
The public sector now has the opportunity to promote housing for other population groups not previously covered in accordance with state aid law. Particularly in conjunction with other innovations such as the “Bau-Turbo“, the public sector can and should review and adapt its strategies and concepts for short-term easing measures on the housing market. The new exemption decision also offers starting points for innovative and competitive procedures in order to use public funds for housing promotion as effectively as possible.
By providing affordable housing, housing companies can enrich their own portfolio of publicly subsidized housing with apartments that are more economically viable. Municipal housing companies in particular should enter into a short-term exchange with local authorities and local politicians in this regard.
