Spain to help young citizens fly the nest with foreclosed homes

[April 18, 2023]  MADRID (Reuters) -Spain is aiming to help millions of young adults still living with their parents to rent their own homes by offering them properties abandoned when its housing market collapsed a decade ago.

The rising cost of rent is set to become a key campaign issue as Spain gears up for regional ballots on May 28 and a general election later in the year. Just 16% of young people in Spain live independently, compared to an average of 32% in Europe, according to the Observatory of Emancipation.

The government on Tuesday approved plans to make up to 50,000 foreclosed homes held by Spain's bad bank Sareb available for affordable rent. It also reached an agreement with allies in parliament last week to push through a bill that will introduce rent caps of 3% a year in areas where rents are rising significantly.

Economy Minister Nadia Calvino said the government is trying to increase the supply of public housing which at 300,000 homes is just 3% of total housing compared to 9% in the European Union.

"Young people and the not-so-young can't pay for their rented apartments," Housing Minister Raquel Sanchez said of the plan to repurpose toxic assets held by Sareb on Antena 3. "We think it's a measure that will work and it's not the only one that we're putting on the table."

High rents are a particular problem in the Balearic and Canary archipelagos and on the Mediterranean coast, where short-term rental properties for tourists and foreign buyers are crimping supply. In Malaga, in southern Spain, rents have increased by 20.4% as availability fell by 27% in the first quarter from a year earlier, according to housing search website Idealista.com.

Antonio Garamendi, president of Spanish employers association CEOE, said the housing bill's "populist and interventionist" measures would not resolve rising rent prices but instead will "provoke the opposite of what is intended."

Old block of flats are seen in the district of Tetuan with the Four Towers business district in the background, as Spanish government is due to pass a property reform to allow 50,000 homes in its social housing scheme in Madrid, Spain, April 17, 2023. REUTERS/Isabel Infantes

Offering foreclosed homes smacks of politics to attract votes rather than a solution to Spain's social housing shortage since many are likely to be in so-called "ghost" towns where no-one wants to live, said Javier Diaz Izquierdo, a real estate analyst at Renta 4 bank.

"Why not simply make it easier for me to live in any home I choose?" Diaz Izquierdo said.

Sareb was created in 2012 to take over more than 50 billion euros ($54.85 billion) in real estate and other toxic assets from former savings banks that collapsed after a housing bubble burst.

Although the government has said up to 50,000 homes will be made available, in reality only 9,000 are nearly ready for tenants. In addition, it has identified 112 plots of land on which 10,000 new homes can be built initially, with a further 5,000 to be added in the future.

A further 14,000 homes that are already inhabited could also be included in the social renting program, according to Sareb.

($1 = 0.9116 euros)

(Reporting by Charlie Devereux and Jesus Aguado; additional reporting by Emma Pinedo; Editing by Sharon Singleton)

[© 2023 Thomson Reuters. All rights reserved.]This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.