Service Housing: a New Frontier in Social Housing for Workers

These are some of the questions at the heart of the new brief by the Sectoral Strategy and Impact Department, which examines the strategic role of service housing: the provision of housing at prices below market levels (controlled rents) for workers, aimed at improving access to housing and labour mobility, supporting territorial competitiveness, and responding to the evolving needs of the labour market.

Read the key messages of the study and download the full document for further insights.

• Housing affordability - understood as households’ financial capacity to bear the costs of purchasing or renting a home—has become an emergency in many European countries. In 2023, around 9% of the European population spent more than 40% of their income on housing.
• Structural trending - including growing urbanisation, wage stagnation, and the increasing perception of housing as an investment asset—have intensified pressure on real estate markets, particularly in large urban centres, reducing access to housing for ever wider segments of the population.
• In Italy, around 1.2 million households struggle to meet housing costs. These are mainly single-income or single-person households, precarious or low-skilled workers, living in municipalities with more than 50,000 inhabitants and renting their homes. Young people are the most affected group: 12.4% of those under 34 spend more than 30% of their income on housing, a share more than three times higher than that of those over 65 (3.2%).
• The availability of controlled-rent housing is limited and below that of European peers. Italy stands at 2.4%, compared with an EU average of 8%.
• Alongside the traditional targets of social housing—disadvantaged households, students and the elderly—a new emergency has emerged: mobile workers. A shortage of rental housing and rents that are high relative to disposable income constrain labour mobility, hinder the matching of labour supply and demand, and prevent the efficient allocation of productive factors.

In this context, service housing emerges with the aim of promoting labour mobility in areas characterised by high housing pressure and a strong demand for labour, thereby reducing existing imbalances.

• In Italy, service housing is an emerging frontier: a structured model and a clear regulatory framework are still lacking.
• Territorial demand for service housing is estimated through the Worker Housing Needs Index (IFAL), constructed for each province on the basis of two key determinants: (i) housing affordability and (ii) demand for extra-provincial workers. The results show:
  • a strong concentration of worker housing needs in 15 provinces, which account for more than one third of national labour demand, mainly located in Northern (9) and Central Italy (6);
  • these provinces include both large metropolitan areas (such as Milan and Rome) and smaller territories with highly dynamic labour markets (such as Bolzano, Bergamo and Brescia);
  • overall, these areas generate more than one third of national GDP and have recorded growth in the number of firms and employees over the past decade, qualifying as territories of demographic and economic relevance.
• The development of service housing may be hindered by four main factors: (i) urban planning and administrative obstacles; (ii) fragmented governance; (iii) the absence of a system-wide recognised asset class; and (iv) a lack of targeted incentives.
• From this perspective, the involvement of patient institutional investors, operating through indirect financing models (Funds of Funds or Public–Private Partnership structures), together with the introduction of hybrid housing solutions (serving different user targets and time horizons), could facilitate project implementation, ensuring their economic and financial sustainability and enabling the deployment of replicable and scalable intervention models at the national level.