21st July 2024
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Spain frees up around 50,000 ‘bad bank’ homes to ease the housing crisis

Spain’s coalition government of the PSOE socialists and left-wing Podemos group approved a plan on Tuesday to make available around 50,000 homes for rent at affordable prices as part of measures aimed at curbing soaring rents and house prices.

The apartments will come from the state-controlled SAREB ‘bad bank’, the acronym of ‘Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria’, established in 2012 in the midst of the real estate and international financial crisis. It was formed as a result of the agreement between the Spanish and European authorities to create ‘a company responsible for selling and managing the loans and properties of rescued financial entities’.

The SAREB plan follows a much-hailed agreement last week between the coalition parties and their parliamentary supporters of the Catalan pro-independence Esquerra Republicana (ERC) party and the Basque nationalist EH Bildu group, for what would be democratic Spain’s first-ever housing law.

The bill, expected to get full parliamentary approval in the coming weeks, envisages putting a 3% cap on apartment rent increases in 2024 in so-called ‘high-tension areas’ where rents increase most, as well as restricting increases in future years.

As of 2024, rent increases will no longer be linked to the country’s high inflation rate but rather to a new, lower index.

Rents and house prices, alongside unemployment, are considered the biggest problems for people in Spain, particularly young people and low-income families.

‘It is a major problem because housing in Spain is a constitutional right, but not a real one,’ socialist Prime Minister Pedro Sánchez said at a political meeting Sunday. He said young people often had to wait too long to be able to leave their family homes and get a place of their own.

The measures come just over a month before municipal and several regional elections that will be seen as a test for the government in a general elections due by the end of the year.

Spain has one of the European Union’s highest average emancipation ages as high rents coupled with poor salaries and uncertain job conditions prevent many young from leaving their parental homes.

Spain put a 2% cap on rent increases last year as rents soared due to high inflation. Landowners have traditionally used the inflation rate to decide on increases. The proposed housing bill also toughens eviction regulations.

The government said it was making 21,000 SAREB properties available to regional and city authorities. It will press for controlled social rents in 14,000 other properties already inhabited and use land owned by the SAREB to build 15,000 new apartments with controlled rents.

Sánchez promised to increase public housing from less than 3% to 20% of all housing, but didn’t give a time frame for this. The EU average is 9%.

But it remains to be seen how effective the measures will be. Under Spain’s political system, housing and education are basically in the hands of regional governments. But many regions and cities, including Madrid, are run by the right-wing People’s Party (PP), which opposes the new law, claiming it interferes in the free market.

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