Home » Housing bill expected after the summer will make Spain’s housing problems worse, warn industry insiders

Housing bill expected after the summer will make Spain’s housing problems worse, warn industry insiders

Raquel Sánchez, Minister in charge of the MITMA Dept. (inc. Housing)

The housing bill currently going through the Spanish parliament in Madrid will exacerbate Spain’s housing problems and reduce new home building by up to 90%, warn industry insiders.

Spain is forever tinkering with laws that regulate the housing market without much success. The latest housing bill going through parliament in Madrid is the baby of the far-left faction in the coalition government, and will be the most interventionist since the days of Franco, who was much closer to the hard-left when it came to housing laws than they might care to admit. 

The latest bill is expected to get on the statute books sometime after the summer with a raft of measures to control rents and force private developers to build more social housing. A new report by the Institute of Economic Studies (Instituto de Estudios Económicos IEE) identifies seven negative consequences the new law drafted by MITMA Minister Raquel Sánchez’s departement under pressure the hard-left will have on the Spanish housing market:

  • Rent controls will reduce the balance sheets of all rental portfolios and their owners, both large and small.
  • Leverage will increase as asset values decline making the rental sector riskier and more expensive, which will also reduce lending and investment. Rental investment will decline with rising costs and risks.
  • The supply and quality of rental homes on the market will go down as a consequence, exacerbating the housing access problem.
  • Housing costs will increase for everyone, but the least well-off will be hit the hardest.
  • New home building will collapse by as much as 90% as a result of imposing a social housing quota of 30%, destroying 400,000 jobs.
  • Tax revenues from construction and housing will decline by as much as 6.8b Euros
  • The social cost of making housing even less accessible will increase as young families find they can’t find a home of their own, and squatting increases.

“It’s worth pointing out that the draft law has already had a negative impact on the sector and on the housing market  as a whole, even if it never comes into force,” says Daniel Cuervo, head of Madrid’s real estate developer association ASPRIMA. “The legal insecurity created by a draft bill with such measures has directly affected the investment decisions of land development companies and the consequential promotion and construction of unregulated and affordable  housing.”

Iñigo Fernández de Mesa, head of the Spanish Confederation of Business Organisations (CEOE) says that the draft bill “is an attack on private property, hammers the private sector, discriminates against large property owners, and has a worrying tolerance of squatting.” It is not expected to achieve any of its stated objectives.

So there you have it. Spain will soon introduce a new housing law to control rents, increase social housing and protect squatters, which the industry argues will reduce new home building, reduce rental investment, reduce housing access, increase housing costs, and encourage squatting.

But the warnings are falling on deaf ears, and the government shows no signs of changing course. If the bill becomes law and the industry is proved right, there is going to be a big decline in new home building, rental investment, and renovation in the years to come, and a big increase in squatting.

2 thoughts on “Housing bill expected after the summer will make Spain’s housing problems worse, warn industry insiders

  • In The Netherlands we have an organisation called the Central Planbureau, which tries to predict the economic and otherwise consequences of government actions. It supposedly is independent of the Government, and often studies such things the effects of changing taxation, changes to housing policy as well as environmental issues. Does such a Organisation exist in Spain?

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