The images out of Madrid, Spain, of an elderly woman being evicted by riot police from an apartment she had been living in for over 70 years without ever missing a rent payment made headlines around the world, leading to massive protests throughout the country against housing precarity. The cost of buying a home in Spain has climbed a whopping 81% in the last decade, with rents not far behind, yet the average salary has only risen 29% during that same period, making access to housing difficult for most Spaniards.
Curiously, the Spanish constitution enshrines the right to housing in its article 47, which states that “all Spaniards have the right to enjoy decent and adequate housing.” It even goes on to state that “public authorities shall promote the necessary conditions and establish the relevant regulations to make this right effective, regulating land use in accordance with the general interest to prevent speculation” (emphasis added).
Clearly, Spain’s public authorities are not fulfilling their constitutional duties. The reason may be that many politicians are themselves landlords and property speculators (even in the Socialist Party), so there is little to no political will to change the system. But the current protests and an election call are now forcing the issue of access to housing into the political sphere.
It is evident that Spain’s growing housing precarity is caused by wages not keeping up with the true cost of living. But public authorities can only increase the minimum wage, which Socialist prime minister Pedro Sánchez’s government has indeed done by 86% in the last 10 years. That doesn’t translate into proportionately higher incomes for the middle class, however, nor Spain’s many self-employed. Lowering the cost of housing becomes necessary, then. Already in 1998, the conservative Aznar government liberalized terrain for new housing construction with the intention of lowering the cost of housing, but instead this sparked a real-estate boom that went bust in 2008, leaving many new homeowners holding negative equity. An economic crisis ensued in which lay-offs resulted in countless mortgage foreclosures and evictions of families, with Spanish banks holding “toxic assets” that were then cheaply bought up by investment funds (referred to in Spain as “vulture funds”). The central government eventually bailed out the banks with public money, but not those who had been evicted, proving true the idiom that we live in times of “communism for the rich and capitalism for the poor.” This ultimately led to a shift toward a larger proportion of rental housing owned by corporate landlords, which explains the latest speculative boom and dramatic rise in rents. This time, however, the boom is largely in existing housing stock: new housing construction has been slow compared to the previous boom.
Now Spain faces a severe shortage of affordable housing. As usual, opinions vary widely on how this should be remedied. Neoliberals say “remove red tape to incentivize private developers to build more supply,” believing that this will lower prices and rents. But when has that ever happened? The only time homes ever decrease in value is in an economic downturn, which is presently not the case as the Spanish economy outperforms the rest of Europe. More supply is likely to exacerbate the current real-estate boom and lead to another 2008-like economic crash. Then there are those on the left who call for tighter regulation of rental housing and the abolishment of home sales to speculators, especially vulture funds. They point to the many dwellings that are currently either sitting empty or else exclusively rented out short-term to expats and tourists. Property owners generally don’t want to rent to locals because expats and tourists are willing to pay much higher rents, and because having long-term tenants living in a home makes it more difficult to sell. But will rental regulation and abolishing speculation by themselves solve a current housing deficit estimated to be in the order of 800,000 units? Not very likely.
As usual, neither the ideological left nor the ideological right is entirely correct. What Spain needs is both. It needs massive new housing construction, and it needs better regulation to ensure that new as well as existing housing is no longer subject to rampant speculation. Having it both ways is tricky, of course. Will a private developer want to build new housing if new rental regulations cut into profit margins? This is where the reduction of construction-related red tape will have to provide adequate compensation. There’s certainly no shortage of such red tape in Spain: a building permit for a simple addition to a house requires reams of paperwork and can take years to be granted, while excruciating habitability codes drive the cost of new housing construction through the roof. Perhaps stricter rental regulations won’t seem so punitive if planning, habitability, and construction bureaucracy is reduced in return.
Even so, developer-built housing will only solve a small part of the housing shortage. Private developers are generally not interested in building housing that is “affordable” since profits per square meter are much higher in the luxury market, not exactly the housing sector that’s in crisis. The only effect luxury housing can have on affordability is if it “frees up” lower-end housing, but that can only happen if there’s upward social mobility, which is largely absent these days. It’s therefore very important to also build new affordable housing, and this is where authorities need to commit adequate public funds and public land for cooperatives and other kinds of not-for-profit housing.
If housing is a constitutional right, and rights must be guaranteed by public authorities, then those authorities must build housing in the event that the market is not supplying it. In Austria and the Netherlands, for example, social housing comprises around 30% of housing stock compared to less than 3% in Spain. The Spanish state generously funds public infrastructure works such as high-speed rail, highways, and airports, so why not social housing? Perhaps social housing should be considered vital “public infrastructure.”
If public coffers can’t cover the cost of social housing, then taxes will simply have be levied, and whom better to tax than those very speculators who have driven up the price of housing? A progressive tax should immediately be applied to property ownership whereby the owner of a single home pays no tax at all, while the owner of multiple properties is taxed according to how many they own. The more they own, the higher their tax bracket. This would moreover disincentivize corporate, large-scale mega-developments in favor of more human-scaled urbanism.
Even with the easing of bureaucratic hurdles, new housing would still take years to build. This is why rental regulations affecting existing housing stock are also necessary: these would at least provide interim relief. What is certain is that Spain’s housing crisis needs to be addressed both short- and long-term, and at every scale. Why not build new towns? Why not convert tourist resorts that are empty in winter into year-round communities? Why not incentivize the subdivision of large apartments into smaller ones now that households are smaller?
There is no lack of architectural know-how in Spain to get the job done. The only thing lacking is political will. Now that an election has been called amidst massive housing protests, let’s hope this political will finally materializes. Better late than never.
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