Chapter 11:
Tense times for tenants
Quality of life


Takeaways
Increasing numbers of Europeans are unable to secure housing. Rising mortgage interest rates and high purchase prices have pushed many out of the house purchase market. People are remaining longer in the rental market as a result: 45% of 30–39-year-olds were renting in 2019, up from 38% in 2010.
Tenants are more disadvantaged than homeowners in many respects. For instance, housing costs are 45% higher for tenants on average than for homeowners, and in all Member States, tenants spend more of their income on housing than homeowners.
Governments are attempting to curb spiralling rents using various measures, including rent subsidies and rent controls, but these measures need to be applied carefully as they can favour some and disadvantage others. Social housing provides homes with low rents but waiting lists can be long.
Of the various crises Europe battled in 2023, lack of affordable housing was high in the public consciousness. Strong demand combined with insufficient supply have been driving up house purchase prices and rents for several years in capital cities and other centres of employment. In many ways, tenants are at more of a disadvantage than homeowners: more of their income is consumed by housing costs, and the high rents they pay never count towards a house purchase. Still, their ranks have been swelled since the escalation of mortgage rates in 2022 by buyers priced out of the home purchase market. The knock-on effects are many: cities cannot attract essential workers such as teachers and nurses, young people cannot leave home and older people cannot downsize, to name a few. Governments have adopted measures to ease the situations of tenants in the overheated rental market, but such initiatives can easily backfire.
Most Europeans own their own homes; just 31% of the EU population are tenants. However, the individual Member States differ enormously in this respect – over half of Germans rent their homes, while just 5% of Romanians do so (Figure 31).
There is also much variation within Member States. In Czechia, for instance, where 23% of the population are tenants, the proportion of people renting ranged from 35% in the Prague region to 13% in the Zlín region.
Figure 31: Breakdown of population by type of tenure, EU Member States, 2022 (%)
Source: Eurostat, Distribution of population by tenure status, type of household and income group – EU-SILC survey [ilc_lvho02]

Home ownership increasingly beyond reach

The cost of buying a house has been rising since the EU emerged from the economic crisis in 2014 (Figure 32), but the growth is concentrated wherever jobs are in abundance, meaning capital cities and large metropolitan areas for the most part. In Croatia, for example, the average purchase price of an apartment in Zagreb in 2022 was over €3,500 per square metre, whereas in rural areas and small cities in the east, it was around €550 per square metre.
The rising prices have led to a drop in ownership in several Member States. Home ownership fell by more than 3 percentage points in Bulgaria, Cyprus, Denmark, Finland, Lithuania and Spain between 2012 and 2020. In Poland, however, home ownership rose by 3 percentage points in the same period.
It has long been the pattern that people rent for a period before purchasing a home, but the prospects of buying are diminishing for younger generations. With purchase prices rising to unattainable levels, they have little choice but to remain in the rental market, with the upshot that 45% of 30–39-year-olds were renting in 2019, up from 38% in 2010.
Buying in the property market became even less attainable in 2022 when mortgage interest rates, which had been at historical lows since the 2008 crash, began a rapid rise in the wake of the ECB increasing its lending rate in an attempt to control inflation (Figure 32). Mortgage holders with variable rates saw their mortgage repayments escalate as a result.
Figure 32: Rent, house prices, interest rate and disposable income, EU27, 2005–2023
Notes: Indexed, January 2005 = 100. Interest rate is Euribor, euro interbank offered rate (based on the interest rates at which selected European banks borrow funds from one another).
Sources: Eurostat, House price index quarterly data [prc_hpi_q] and HICP – monthly data [prc_hicp_midx] – rent: actual rentals for housing; European Central Bank, Euribor 1-month – Historical close, average of observations through period

Rental markets overheating

As stressful as the housing situation is for homeowners, it is even more so for tenants on several fronts. Rents have been rising for the past two decades. Those who rent on the private market especially experience high levels of housing insecurity, with 46% saying it was likely they would have to leave their homes in the coming three months because they could no longer afford it.
Housing costs – taking account of rents, mortgage interest payments, housing taxes, utility bills, maintenance costs, and so on – are on average much higher for tenants than for homeowners. This is the case in all Member States apart from Germany (Figure 33). In the EU as a whole, housing costs rose by 8% for homeowners and by 23% for tenants between 2010 and 2019.
Figure 33: Housing costs, EU Member States, 2019 (monthly purchasing power standard)
Note: Member States ordered according to size of gap between homeowners and tenants.
Source: Eurostat, Total housing costs in purchasing power standard (pps) – EU-SILC survey [ilc_mded03]
Tenants spend more of their income on housing than homeowners in all Member States. And while on average Europe’s homeowners spent less of their income on housing in 2019 (16%) than in 2010 (18%), its tenants spent more (31% in 2019 and 28% in 2010). The housing cost overburden rate – the share of people who spend over 40% of their income on housing – decreased for all types of tenure between 2013 and 2019, but it decreased the most for owners with a mortgage, and it is highest for private tenants. The rate is particularly high in densely populated areas, where 48% of residents are considered to be overburdened by housing costs, and among people in the lowest income quintile, affecting 32% of residents.
One result of the rising unaffordability of renting is that fewer young people have the means to leave home. In 2010, 29% of 25–34-year-olds in the EU were living with their parents; this figure had increased to 31% by 2019. The increase is higher in individual Member States, and is 6 percentage points higher or more in Belgium, Croatia, Cyprus, Greece, Ireland, Italy and Spain. A quarter of 25–34-year-olds in the EU who are working live with their parents.rents.

Efforts to control rental costs

Governments across the Member States have attempted to control housing costs for tenants through various measures, but they need to be implemented judiciously or they may backfire. Providing rent subsidies for tenants in the private market is a common approach in some Member States. However, if subsidies enable recipients to pay higher rents, they may inadvertently drive up rents for others. A high proportion of households have subsidised rents in France (21%), Denmark (20%), the Netherlands (18%) and Finland (14%). Around half of all tenants in Finland and Denmark and 60% of tenants in France and the Netherlands receive such subsidies. By contrast, in Belgium, Cyprus, Estonia, Lithuania and Romania, fewer than 2% of households are in receipt of subsidies.
Rent controls, which place a ceiling on the rents that property owners can charge to tenants, are used in several Member States to protect sitting tenants from rent increases. They may, however, distort the housing market in the long term. They can lead to rent increases in areas outside the rent control zone and reduce the value of properties in the areas covered. They can often mean that incumbent tenants are better protected than new tenants. They can also discourage existing tenants from moving to a more suitable home and hinder labour mobility.
Social housing – rental accommodation provided at below-market (often well below) prices, allocated according to specific rules – plays a major role in some Member States and very little in others. Social housing constitutes 28% of dwellings in the Netherlands, 23% in Austria, 20% in Demark and 17% in France. In Cyprus, on the other hand, social housing is non-existent, while in Romania it is very limited, housing just 0.7% of households. In countries where social housing is scant, it is usually limited to people in highly vulnerable situations. Waiting lists for social housing are common across the Member States, even those with the largest social housing stocks, and waiting times can be long. In the Netherlands, in at least 90 of its 344 municipalities, people must be registered for over 7 years to obtain social housing, and in 5 municipalities waiting times are longer than 17 years.
Housing has become a pan-European crisis, one that affects all classes in society. It ranked in seventh place among citizens’ concerns at national level in the Autumn Eurobarometer 2023, but it was in first place for Ireland, Luxembourg and the Netherlands and ranked in third position in Portugal.
The housing situation is weighing down the young generation more than any other group; for many, the hope of having a secure and affordable home is a pipe dream. They remain in the family home thwarted from living independently or they see their incomes eaten up by punitive rents.
Housing falls outside the competences of the EU, and the conditions that shape property markets vary greatly by Member State. However, EU policies have an effect on housing markets in many ways. For instance, the 2014 Mortgage Credit Directive, which is currently being reviewed, regulates the sale of residential mortgages. Housing initiatives across the EU are being financed by Recovery and Resilience Facility (RRF) funds, and a major strand of the European Green Deal is the retrofitting of the housing stock to improve the energy efficiency of homes. Online journal Politico quoted Commissioner Nicolas Schmit as saying ‘Europe should be involved in solving this housing crisis.’ When the new Parliament and Commission take up their duties later in 2024, they will need to decide what place, if any, housing will have on the policy agenda.
Discover more
- Report: Unaffordable and inadequate housing in Europe
- Blog post: How to prevent a housing crisis
- Podcast: Episode 14 – Housing
Credits
Story images: Unsplash
Chapter tiles: Unsplash; Chapter 2 © Victor/Adobe Stock; Chapter 7 © focusandblur/Adobe Stock