Supply-side policies to improve access to rental housing in Spain

Lower-income people access housing to a greater extent through renting (only 55% of Spanish households at risk of poverty own their home), and housing-related costs account for a larger share of their budgets (26%) than for homeowners (11%). As a result, 33% of the population in the poorest quintile is overburdened by housing costs.

Demand-side policies focused on income can help resolve this situation, but they are unlikely to be enough on their own, as they find it harder to reach families at the lower end of the income distribution (particularly tax deductions). Moreover, their use can push up housing prices, which leads to part of these benefits being transferred to landlords.

On the supply side, the policies considered so far for Spain have serious limitations.

• Deductions and penalties for keeping homes empty have high costs associated with their management and enforcement.
• Price controls can (1) reduce housing supply in the medium and long term; (2) worsen the quality of the housing stock; (3) segment the market between regulated and unregulated areas, with considerable price increases in the latter; (4) trigger anticipatory increases that end up in excessively high prices. By contrast, Spain lags well behind in the supply of social rental housing: between 2014 and 2018, at the height of the rise in rents, only 7 in every 100 new subsidised homes in Spain were for rent, almost all of them in a few regions (Cantabria, Navarre, Catalonia or the Basque Country). And this despite having one of the smallest social housing stocks in Europe: barely 2.5% of the total (3.9% in Germany, 16.5% in France, 21% in Denmark).