The construction of subsidized housing fell to negligible levels in the last decade

Spain has spent a decade without betting on the construction or qualification of officially protected housing (VPO). The promotion of this type of property at prices below the free market in exchange for a series of limitations collapsed as of 2013 and has remained at negligible levels until today. The Housing Law, which has already passed the first procedure in the Congress of Deputies, will try to renew the momentum for these urban projects that became widespread in practically the entire country during the eighties and nineties of the last century.

The autonomous communities are responsible for betting on subsidized housing and setting the conditions to shield its sale, enabling more affordable prices than on the free market. However, in the last decade the rating of VPO was negligible. After the introduction of the 2013-2016 housing plan, “austerity measures reduced this type of rating”, highlights a report from the ‘Future Policy Lab’ on the housing policies developed in Spain in recent years.

Specifically, and according to data from the Ministry of Transport, Mobility and Urban Agenda, from a commitment to more than 40,000 homes per year for more than 20 years, as of 2013 the number of VPO ratings fell below 10,000 throughout the country. Housing policy, highlights the document coordinated by Carlos Delclós, a researcher at the Autonomous University of Barcelona, ​​”changed direction” in 2013, “the construction of subsidized housing was stopped and rehabilitation and private rentals were promoted.”

In the future state Housing law, which will be in force before the elections on the 28th, a mandatory reserve of land for subsidized housing is established, which increases from 30 to 40% in developable land (new developments) and from 10 to 20% on unconsolidated urban land (reform or renewal actions of the urbanization). In addition, it is protected that the houses, except in exceptional cases, cannot be sold for a minimum period of thirty years.

The report, which Minister Raquel Sánchez presents this Thursday, highlights other dysfunctions in recent years regarding housing policy in Spain. For example, with regard to rent, it can be seen how in recent years there has been a general growth of both landlords and tenants, which implies a “polarization of the real estate system”. In other words, the proportion of people who do not own their home is increasing along with the proportion of those who own more than one”.

In 2020, the latest data available from the Bank of Spain’s household financial survey, around 80% of households owned their main home, a figure that in 2022 was 87%. In other words, there is a trend of increasing rents in recent years in all age groups. An increase in tenants that is even greater in young people. In 2002, the proportion of renters was around 15% among households under 38 years of age and stabilized around 10% in households over 40 years of age. Eighteen years later, in 2020, this ratio has increased for all age groups, especially among those under 33, where this ratio has grown by up to 35 percentage points, and has doubled in the case of households between 38 and 58 years.

The number of homeowners has also decreased in Spain in practically all age groups over the last few years. At this time, and always with the data from the financial survey of families, barely 27% of those under 28 years of age are owners, when in 2002 the proportion rose to 65%. There is, therefore, a “displacement of households towards rental housing”.

The three factors mentioned (increase in landlords, increase in the proportion of households with tenants and decrease in subsidized housing) show that the change in the real estate market has been structural. “It is revealing –says the study- that the households that own a VPO have approximately the same age and level of income as the owners at market rate. This suggests that this form of subsidized housing has had a negligible impact in terms of redistribution. For various reasons: because “the concession of this type of public housing to more economically vulnerable households has not been prioritized”, because “many VPOs have gone out to tender at prices very similar to those of free housing, which has been very beneficial for private developments”, and because “these homes have been introduced to the unregulated market a few years after their purchase, which has implied a direct capital gain for their owners and a gradual loss of the public housing stock”.

The differences for rent between Spaniards depending on the type of home you have or in which they live are also clear. Thus, a gap is observed between the income of landlords and other households. “With an average age ten years older than that of tenants, the median income per owner household is 76,504 euros, compared to 35,511 euros for VPO households and 27,984 euros for tenant households.”