On 16 December, Europe took a decisive step in the way it approaches housing: it is no longer seen merely as a market or social policy, but as essential infrastructure. At the heart of this new framework is a key concept: cost-rental.

— by Francisco Rocha Antunes

 

What exactly is cost-rental?

Rather than setting rents at the maximum the market can bear, the cost-rental model follows a simple rule: rent is calculated based on the real cost of producing, financing, maintaining, and managing housing, with a limited margin. CAPEX (construction, design, interest), OPEX (maintenance, insurance, management), and long-term capital costs are summed, spread over the building’s lifetime, and converted into a stable, predictable, regulated, and transparent rent.

 

Not free market, not social housing – the “third pillar”

Cost-rental occupies the space between:

• the free market, where rent is determined by supply and demand and often disconnected from real costs;

• traditional social housing, heavily subsidised and typically reserved for very low-income households.

In cost-rental, rent is capped by costs, profits are limited, and reinvestment is mandatory.

It primarily serves those in the middle:

• who do not qualify for social housing,

• but can no longer afford market rents.

 

Limited profit + reinvestment = a stable, non-speculative housing stock

Recommendation 54 of the Housing Advisory Board is clear:

• allow returns for investors and operators,

• but with a clear ceiling,

• and with any surplus reinvested in the housing stock itself (more units, better maintenance, more stable rents).

This is the opposite of the “buy cheap, raise rents as high as possible, sell at a profit” logic.
It treats housing like water or energy networks: regulated infrastructure, providing returns, but with a public mission.

 

Why is this central to the EU Housing Plan?

Because cost-rental is the only model that, at scale, can combine:

• stability for families,

• moderate and predictable risk for financiers,

• social impact aligned with European objectives (cohesion, climate, inclusion).

It is the way to build a structurally affordable housing stock that does not disappear when subsidies end or when the market heats up.

 

If Europe provides the political and financial framework, we are ready to provide the product, the model, and the partners.

At the end of the day, cost-rental is not a theoretical concept.

It is the difference between families at the mercy of the market and families with a stable, predictable, and fair home.

 

At MOME LIVING, we are ready for the new European Union Affordable Housing Plan.

— Interview with Idealista: see here