We react to the key components (price controls, tax measures and increased supply) of the new Housing Law presented by the Government, based on the proposal approved by the Council of Ministers, which will now begin its legislative process in Parliament.<\/p>\n
To begin with, it does not seem certain that price controls as explained by the Government will solve the real and pressing problem of access to rental housing in Spain’s main cities. The proposal suffers from three key problems:<\/p>\n
\u2192 It can be expected to depress supply, as it discourages investment in new homes or in the renovation and maintenance of existing ones. Experience in other cities (Berlin, Paris or San Francisco) suggests these negative effects.<\/p>\n
\u2192 Defining areas instead of using an individualised measure means that some families may benefit from the rule even though their rent burden is not high, and others may not despite a high rent burden, precisely because they are outside or right on the border of the area. Moreover, since these areas are not tied to a single administrative boundary, there would be an incentive to expand them to include more beneficiaries, diluting their precision.<\/p>\n
\u2192 The rule faces implementation challenges: the need to classify, locate and monitor landlords in order to distinguish between large and small ones and apply different rules to them, as the proposal requires; the fact that the regions can decide whether or not to implement it and will have to coordinate it with similar existing rules; and a certain risk of suspension in light of the 18-month delay in implementing rent controls suggested by the Government. All this raises fears of a law that could be ineffective from the outset.<\/span><\/span><\/p>\n On the tax front, the new measures are expected to carry less risk of distortion, but to have rather modest effects based on what is known about them so far:<\/p>\n \u2192 The \u20ac250 rent voucher for young people (aged 18-35) could be underfunded according to our estimates: the expected budget of \u20ac200M for the target of 50,000 young people would cover less than 10% of potential beneficiaries. The effectiveness of the voucher will also depend on whether landlords can capture it by incorporating it into the rent, as some studies estimated for France (78% of the subsidy captured by the landlord), the United Kingdom (60-66%) or Finland (57%).<\/p>\n \u2192 The 150% surcharge on property tax (IBI) for homes owned by large landlords that have been empty for two years or more could have limited reach, because this type of property is less common in provinces with demand problems. In addition, its implementation will be complicated and weakened by the list of exemptions it includes, requiring adequate registers covering the situation and ownership of each non-primary residence.<\/p>\n \u2192 Incentives for small landlords in the form of tax deductions are, a priori, regressive, since landlords are at the top of the income distribution, although this cost could be worthwhile if rental supply increases. Even so, only a rather modest increase can be expected: AIReF found that eliminating a 100% deduction (in force until 2015) led to only a 2% change in supply over three years.<\/p>\n Finally, the proposal sets a 30% quota of all new developments for subsidised housing, half of which (15% of the total) would be for rent. Spain is one of the EU countries with the smallest share of social rental housing (barely 1.6% of households covered), underlining the need to expand this supply. However, assuming the new law had been applied between 2015 and 2019, this figure would have risen to just 1.82%, still insufficient growth to reach the levels of other benchmark European countries. In any case, existing evaluations of inclusionary zoning measures show mixed or negative effects on total supply, and uncertain effects on prices.<\/p>\n As our main alternatives, we propose:<\/span>\u00a0<\/span><\/p>\n \u2192 In the long term, a much more aggressive policy of building housing for social rent. If the inclusionary zoning mechanism is to continue to be used, it should be complemented with clear and robust incentives to avoid reductions in supply, such as density bonuses.<\/span>\u00a0<\/span><\/p>\n \u2192 In the short term, policies are much less clear-cut, but Spain should make use of existing tax and redistributive instruments, such as the Minimum Living Income, which currently limits aid to people over 23 and to a minimum period of having lived independently, which limits its power. Similarly, through the IMV itself or a wage supplement mechanism, the range of inclusive tools aimed at facilitating independence and the formation of new households for the generations entering adulthood should also be broadened.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" En el presente documento analizamos al detalle los componentes clave (control de precios, medidas fiscales y aumento de oferta) de la nueva y ambiciosa Ley de Vivienda presentada por el Gobierno.<\/p>\n","protected":false},"featured_media":5793,"template":"","acf":[],"yoast_head":"\n