The Socialist Party, after almost seven years in charge of the Nation’s executive, has not been able to solve the obvious problems that were on the horizon, but has even worsened them. It has made different promises for more homes throughout these years (2018, 2021, 2022, 2023 and 2024), all unfulfilled. But above all, this Government has put the owners on the ropes, promoting the illegal occupation of homes and expropriating part of their value, with price caps that reflect its inability to expand the supply. In the autonomous governments of the Popular Party, sometimes spurred by Vox – which substantially agree on these issues –, attempts have been made, within their sphere of competence, to improve conditions to facilitate the development of land and housing. Madrid has reformed its Land Law up to three times to eliminate obstacles and shorten deadlines, and has been a pioneer in guarantees that cover one hundred percent of the price of a first home. These measures inspire the plan presented last Sunday by Feijóo in Asturias. They are well-planned proposals, although some, such as the reduction in the ITP for second-hand, are not appropriate for this moment because, given the rigidity of the supply, these savings will translate into a higher housing price.
But the truth is that to solve the housing problem it is necessary to act from different areas that, in turn, affect both regional and exclusive State powers. And it should be noted that both parties – and not only these – seem to agree on replacing the private initiative with a large commitment to public rental housing. It seems as if the administrations want to extend their influence also in that private redoubt that is housing, not only for the understandable case of the needy, but for broad layers of the population.
Of course public housing is necessary, and in fact there are public-private collaboration programs in place that are working well, but it is neither realistic nor desirable to think that this is the solution.
All economic literature recognizes that property is the mechanism that best integrates families into society. It is the best means to sustain the family bond and have children, to generate roots, to integrate into neighborhood life (see, conversely, the French ‘banlieues’) and to, ultimately, provide a certain degree of freedom and independence and a piggy bank for bad times. In Spain there is not a large public park for rent because since the sixties we have chosen to provide the population with owned housing; first promoted by the State, and since 1975 mostly by the private sector. And there is no doubt that thanks to this in Spain there has been a large solid middle class, which has overcome very difficult social and economic times. But the truth is that now our young people cannot do it. The ownership rate among those under 35 has fallen from 70 percent to 30 in the last fifteen years. What has happened? After the 2008 crisis there was an overreaction – the law of the pendulum – which took shape in a series of regulations that seemed to aim to make the banks pay for the excesses committed. But the truth is that now it is our young people who are paying the bill, with inaccessibility to property. Let’s see it.
In 2013, a law was approved for two years that suspended the launches of mortgage debtors. That is, a bank would no longer have collateral behind its loan. A law still in force with the unanimous support of Congress! How many families have been left absolutely out of the mortgage market with this law? Likewise, in 2019, on the occasion of the transposition of Directive 2014/17, due to an excess of misunderstood do-goodism, Congress approved law 5/2019, overprotecting the mortgagee – for example, extending the unpaid monthly installments up to fifteen for proceed to early maturity of the loan. Thus, part of the financial sector stopped financing cooperatives or demanded harsher conditions that have expelled the most humble families. Thus it is easy to understand that rental demand has exploded, and that the park is unable to satisfy it, despite the fact that there are 1.2 million more rental homes (56% more) than fifteen years ago. Furthermore, Regulation (EU) 575/2013 has defined loans to development companies as “speculative financing of real estate property”, and the capital consumption for banks from these loans is 150%. Thus it is impossible for the real estate sector to flourish again.
Let’s take a look now at the rent. The reform of the Penal Code of 2015 turned ‘squatting’ into one of the cheapest crimes in our system. Added to this is the endless extension of Royal Decree Law 11/2020 which, designed for the pandemic, has finally served to stop professional defaulters from paying rent without consequences, the so-called ‘inquiokupación’, a phenomenon that has been reinforced by the latest law from the Podemos factory: the state housing law.
In conclusion, in addition to expelling families with fewer resources from accessing property, successive governments have put a damper on the rental market. If we add to all this the massive arrival of immigration, it turns out that only in the period between 2022 and 2025 the Bank of Spain has estimated a deficit of 600,000 homes. The perfect storm. And, by the way, the Government’s scapegoat, tourist housing, barely represents 1.8 percent of the park’s total.
Of all the measures announced by the PSOE, perhaps the only reasonable one is the 100% personal income tax exemption for those who rent below the reference income. Of the rest, the attack on free housing SOCIMIs, and the practical prohibition of purchase for non-residents, deserve special mention due to their inconvenience. A real nonsense unbecoming of a Western democracy. Meanwhile, the PP does the right thing when it proposes to repeal the Housing law, approve a new land law, and an anti-squatter law that, under other formats, has already been processed in Congress by both the PP and Vox several times. since 2019, always condemned to failure by the so-called “progress” majority.
Ultimately, it is in our hands to undo the housing mess, and to do so it is not necessary to restrict freedom, intervene in property, limit prices, undertake pharaonic public housing plans, or squander European funds. All that is needed is, simply, good regulation. A regulation that facilitates mortgages for young people and loans for developers; a regulation that protects the right to property against illegal occupation; a regulation that offers legal certainty and speed in urban planning processing. The recipe is simple, but is there the will?
#José #Luis #Ruiz #Bartolomé #Housing #solution
