European Court: ‘Objection housing associations to SGEI decision manifestly unfounded’

Aedes comments on a ruling that may impact the housing sector across the EU

The Hague, 29 May 2015 | Published in Economy

The European Court dismissed the objections of landlords against the SGEI Decision of the European Commission arguing that their actions were "manifestly unfounded". Aedes summarizes the background and comments on the European Commission interference.

The Court finds that the Commission’s Decision only captures an agreement with measures proposed by the Dutch government.

SGEI Decision

The SGEI Decision of 2009 of the European Commission included a maximum income limit for the allocation of social housing. The decision provoked strong opposition from social landlords, tenants and municipalities.

Member States with a developed social housing sector are worried the Commission might intervene to limit SGEI (services of general economic interest) tasks and their target groups, based on its own residual approach. This has already been the case in Sweden. Hence, the 130 litigating housing associations believed the Commission exceeded its powers by imposing a European definition of social housing in the Netherlands and to demand social housing limits its access to ' disadvantaged citizens or socially less advantaged groups’.

There are market conditions, for example in major cities in the Netherlands, where social housing for is the only affordable and accessible solution for middle income families. Furthermore, the involvement of social landlords to build mixed areas prevents ghettoization and improves the quality of living in neighbourhoods. It often triggers commercial investments in a later stage.

Not unlawful

Initially, in 2005 the European Commission summoned the Netherlands to take measures to bring the Dutch system of social housing in line with European state aid rules. The European Commission argued the social character of the Dutch scheme was less strict than a previous scheme it had approved in Ireland which had a direct link with socially disadvantaged households. Therefore, it was requested the Netherlands:

• adapt the definition of the SGEI task, that make a direct connection with socially disadvantaged households

• any commercial exploitation of public service activities must take place under market conditions

• excessive and structural over-capacity of social dwellings must be avoided by selling these homes

In October 2009 the then Minister of Housing van der Laan and former European Commissioner for Competition Kroes agreed on these points. According to the General Court the Netherlands then accepted these measures and promised to take measures, including the introduction of a maximum income level of 33,000 Euros.

In its judgement the General Court states its competence is limited to judge whether the European Commission assessment of the 2009 agreements is correct in the light of the (alleged) competition issues. The Court finds itself not competent to take into account the Commission’s previous involvement, including the measures from 2005.

Judgements General Court and Court of Justice

"We are disappointed in the ruling. It is very unfortunate that there is no hearing. We will study the judgment carefully and consider next steps", says Marcel van Dijck of Woonlinie, one of the social housing corporations that initiated the appeal. They had already won an appeal before the European Court of Justice against the earlier judgement of the General Court that they would not be admissible.

Back then the European Court of Justice agreed with the social housing organisations: the SGEI Decision of the European Commission of 2009 has adverse effects on the conditions under which social housing enterprises do their work. Now, they have two months to appeal again at the European Court of Justice.

Interfering European Commission

Aedes is against the far-reaching interference by the European Commission in social housing policies and the SGEI tasks of housing associations. It supported the appeal of the social housing organisations. The general interest at stake of SGEI activities must be defined and organised in the Netherlands and at local level. The European Treaty also provides safeguards to Member States by exempting SGEI from competition rules when this is necessary.

According to Aedes, the fact that a more restrictive and nationwide income ceiling was introduced through a European Decision shows that Member States are still losing competencies to the European Commission regarding their services of general interest.