2023-07-21 08:44:54
Like a thread that has run from the beginning to the end of this legislature, the living place has been one of the issues that has most marked the agenda of the coalition government. Present in every budget negotiation, the new Housing Law has been the stone with which the PSOE and Unidas Podemos have been stumbling every few months, until approving it last May, when Pedro Sánchez started with his announcements on the public construction of housing in the middle of the 28M campaign. Now, there is still reel left. The skyrocketing price of rents and the rise in mortgages variables augur a tough challenge for the Executive to leave the polls which is already among the five issues that most concern Spaniards.
Spain has a multi-speed market: the big cities, especially those that attract tourism, have a runaway real estate market, while in ‘Empty Spain’ growth rates are slower. On a national average, rental price is at all-time highs and accumulates a rise of 18% in the last five years. Sales prices have also grown in recent years, reaching levels not reached since 2011, although without recovering the prices recorded before the bubble burst in 2008.
No bubble alert market players and the lack of an offer to meet the high demand will continue to be the catalyst for further increases in purchase and rental prices. Spain builds half as many houses as it takes, taking into account the homes that are created each year, and the rental housing stock is limited and unprofessional.
After four years of government, socialists and purples leave as a legacy a Housing Law that mainly tried to tackle the problem of high rental prices. With this rule, The annual rent updates have been capped and the rights of tenants have been strengthened. However, the application of the bulk of the law remains in the hands of the autonomous communities, which are the ones with the powers in housing matters. Those governed by the PP have already warned that they will not make use of the law.
What initiatives have been proposed?
Faced with this reality, Sánchez announced during the regional and local election campaign the construction of more than 110,000 public housing. The electoral advance leaves this promise of the Chief Executive paralyzed, who approved other measures to face this challenge, such as the granting of guarantees by the Official Credit Institute (ICO) to young people and families with dependent minors of up to 20% of their mortgage.
Despite the fact that the guarantees make the purchase more accessible, most initiatives to date are aimed at lowering the rent. The main one is the public-private collaboration plans, in which the administrations assign land to companies, with the intention that they build apartments for rent at an agreed price below the market. This is one of the fastest ways to expand the public rental housing stock at affordable prices. At the state level, the conditions must be guaranteed so that investor capital continues to support these initiatives, mainly in a macroeconomic context of higher financing costs.
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Another challenge will be updating the Land Law. As the Bank of Spain highlighted in its latest study, Spain must modify its legislation on this matter to speed up the production of land suitable for building more housing. From the Secretary of State for Transport, Isabel Pardo de Vera was working on a new standard, which came to be in public consultation, but was parked after her dismissal due to the train scandal in Cantabria. Now, the new Executive that results from 23J must decide whether to resume this legislative initiative. Also, from the construction employers demand public initiatives to attract foreign labor.
The solutions are not simple or quick. Thus, the employers’ association of the promoters already raises the need for a State agreement that allows for a long-term policy to be agreed upon. The leader of the PP, Alberto Núñez Feijóo, is also a supporter, although for the moment he has barely specified what his proposals are. What is clear is that whoever governs will have to deal with a population that is increasingly concerned about what is a fundamental right included in the Constitution, housing.
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