The double moral standard of public institutions regarding the right to housing.

The institutions have not stopped making friends recently, shifting their problems onto others. A practice that not only highlights their double moral standard and lack of real commitment to the serious housing problem, but also demonizes the figure of the private real estate sector. From my point of view, they have tried to play Robin Hood but without showing the reality, such as the fact that the City Council of Barcelona has public land where they could build housing, which could help partially address the current shortages in housing supply. For the authorities, it has been easier to blame developers and property owners for their problems and lack of action.

They created a regulation to protect vulnerable families, forcing private developers to reserve 30% of their developments for subsidized housing. A law that, moreover, does not show clarity in its application, with different interpretations within our sector, such as whether this 30% should apply to all projects from a single private developer, or attempting to overlook the cultural clash that could arise from including subsidized housing in buildings located in high-end areas, which offer properties with exclusive qualities. Let’s not kid ourselves, the cost of land and construction in prime areas will always be higher.

Certainly, they could promote the public land they already have and meet the demand shortages in the city. But they prefer to make money by sanctioning developers who do not comply with the subsidized housing regulation. According to Law 18/2007 on the right to housing, failing to reserve the required amount is considered a very serious violation, with fines ranging from €90,000 to €900,000. Additionally, it stipulates that in cases of very serious violations, a sanction of disqualification can be imposed, preventing participation in public housing projects for one to three years. This strategy has obviously severely damaged the development activity.

What is clear is that, although the 30% law could have been a solution, its implementation has caused a boomerang effect, leading to an opposite result to lowering prices and increasing the supply of properties in the real estate market.

Then, some will complain that new developments, much needed due to the lack of supply, are being delayed, increasing tension in the real estate market in the city and causing a widespread price increase in both sales and rentals, a topic that has appeared several times in the media. And it seems this will continue. Data showed a 7.3% increase in the third quarter of 2022 compared to 2021 in Catalonia. And the average rental price stands at €1,156/m2 for an 80-90m2 standard home. The rental property owner has also faced challenges with the law passed by the Catalan Parliament in 2020, aimed at limiting rental price increases. Once again, a solution shifted to the private sector, and once again, it has caused the opposite effect, exponentially increasing rental property prices. This increase has clearly been caused by the removal of a significant amount of available supply from the market. 

As a result of so much double moral, we are working with legal uncertainty that severely harms our sector, with long delays, where it can take years from the acquisition of land to the sale of properties. This uncertainty has undoubtedly influenced spectacularly bad data, such as the fact that the number of housing units started in Catalonia in 2022 dropped by 16% compared to 2021, and in the first half of this year, by 15.7% compared to the previous year. A total disaster. And to add fuel to the fire, the laws related to rental properties have focused on limiting and conditioning those homes owned by large property holders, a mistake just by the fact that they represent only 15.1% of the properties in Spain. Therefore, any modifications or requirements that can be implemented for this group of owners will never solve the enormous rental housing problem. What I am certain of is that it will serve to fill headlines or news reports with big titles, pretending to show that solutions are being sought for our society. You may have noticed that in recent months, the variation in rental prices and the use of properties in the new ‘superilles’ areas in Barcelona have been in the news, with rental prices increasing by more than 50% in one year, and traditional rental offerings have shifted to vacation rentals. A continuous stream of disastrous data. Have you wondered what will happen if this ineffective, weak, useless, and insufficient model continues? Personally, I am convinced that if the current trend is not changed, rental contracts will become precious relics, which everyone will try to keep but will become increasingly difficult to obtain. Let's see what the near future holds. Call me a party pooper, but I fear we will continue to see few successes from the administrations in the housing sector.