STATE AID : COURT RESHUFFLES CARDS ON AID FOR SOCIAL HOUSING.

 
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Social housing bodies in the EU have scored a victory. The EU Court of Justice set aside, on 27 February, the order of the president of the EU General Court of 16 December 2011, dismissing the appeals by such bodies from the Netherlands (supported by other member states) challenging the approach of limiting this social public service to less favoured populations (Cases C-133/12 P and C-132/12 P). According to that order, Dutch housing corporations were not distinct from other potential beneficiaries of the aid scheme and consequently could not dispute the Commission's decision.

The ruling, which validates the opinion of Advocate-General Melchior Wathelet, reshuffles the cards. This case concerning Dutch social housing calls into question states' power to determine the boundaries of their public services and will therefore be closely examined by the EU courts.

"The court has paved the way to a judgement on the substance and merit of the residual definition of social housing imposed by the European Commission," welcomed Laurent Ghekiere, in charge of European affairs for Union sociale pour l'habitat (USH), the French social housing body. "This is an initial victory of law over the arbitrary nature of an exclusively residual approach to social services." He adds that this Dutch case has "sparked a wave of litigation in Luxembourg, Belgium and recently in France". The Union nationale de la propriete immobiliere (UNPI), a French association of private property owners, has lodged a complaint with the Commission against state aid granted to USH.

CHALLENGE

The Netherlands notified to the Commission its public measures in support of foundations that manage social housing in this state ('wocos') to compensate for their public service mission. The executive invalidated the measures in 2005, however, holding that this state aid (loans, guarantees, making available of land at advantageous prices) resulted in incompatible overcompensation because the Netherlands' social housing scheme did not target a "public of socially disadvantaged persons". It also criticised the lack of clear separation of accounts between these bodies' public service activities and their more commercial activities.

This was a windfall for IBVN, the Dutch association of institutional investors, which took up this argument in 2007 in its complaint challenging this system, claiming that it creates a distortion of competition on the market for dwellings for a more "well-to-do"...

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