EU Next Generation billions could benefit the Spanish housing market if spent well

Photo credit: Yorgos Karahalis, European Commission

The Spanish property sector has been allocated almost seven billion Euros out of a total of 140 billion that Spain is due to receive from the EU’s Next Generation EU (NGEU) economic recovery package to support member states adversely impacted by the COVID-19 pandemic. If the money is well spent it could benefit the property market by improving the housing stock, and creating jobs.

Spain will get a total of 140 billion Euros as part of the NGEU programme, roughly 50% as grants and the other half as soft loans that need to be paid back to the EU by 2058. The first nine billion arrived in August, with another 20 billion on the way in 2022, and the remainder in half-yearly instalments to the end of 2026. 

The European Commission has made it clear that one of the top priorities of the fund is to fight climate change. Commission President Ursula Von der Leyen has said that the plan’s rationale is to “build a Green Europe, which protects our climate and our environment and which creates sustainable jobs.”

The Spanish government has allocated 6.8 billion of Spain’s share to urban regeneration and renovating the housing stock to make it more energy efficient and reduce greenhouse gas emissions. Just under two billion will be spent on building renovations, including public buildings. 

Last October the government introduced the regulations that will be used to deploy the funds in Spain, including measures like making it easier for Communities of Owners to approve a renovation project.

According to Spanish press reports, most of the funding for energy efficiency improvements will come in the form of income tax deductions between 20% and 60% of the cost, with maximum allowances in place. Energy performance certificates will be used to certify the work. ‘Rehabilitation Agents’ will specialise in managing the whole process for owners.

If the money is well spent and results in a better housing stock that is more energy efficient that should increase the value of the Spanish property market, which is good for everyone. More jobs and activity should also be good for the sector.

However, carrying out building work in Spain tends to be bureaucratic and costly, which is why so many people do renovations without permission. Builders say that renovations without appropriate planning permission are the norm, and requesting government grants or subsidies typically makes the process even more bureaucratic. So there is a good chance that the funds allocated to renovating Spain’s ageing and poorly insulated buildings will not be deployed as efficiently as planned, with disappointing results.

Leave a Reply