In the current debate around Spain’s housing crisis it seems it is always best to blame the outsiders — invariably “foreigners” or “tourists”, for what is a self-inflicted problem (“Non-EU buyers face 100% property tax in Spain’s bid to fix ‘grave’ housing crisis”, Report, January 14). The solution is straightforward. Spain needs to modernise its property market; and then direct investment into appropriate housing, in sensible locations.
Spain’s housing crisis has its roots in Franco’s regime. It did not promote the building of housing for a whole series of self-serving (and some misguided political) reasons. Thus, the stock of housing remained low. While ownership was encouraged, rentals were not.
Few seem to want to remember that Spain only joined the ranks of modern liberal economies in 1986, when it joined the EU. There was a subsequent boom, yet little of the funds were directed to increasing social housing stock and related public amenities. Structural weaknesses were never addressed. To this day the Spanish property market remains beset by restrictions, is opaque and subject to abuse and is thus inefficient.
As the millennium approached, Spain experienced a credit explosion as it adopted the euro. Millions of dwellings were built by developers, using cheap loans from the Cajas or government-owned banks. Banco de España, the central bank, turned a blind eye. To this day there is a stock of nearly 4mn dwellings that have never been occupied; 60 per cent in villages of less than 50,000 inhabitants. The 2012 Cajas scandal still remains unresolved, 12 years on.
With such an overhang of unoccupied dwellings, the rate of newbuilds is much reduced. Meanwhile the mechanism deployed by Sareb, Spain’s “bad bank”, has been to return stock to the private market when borrowers have defaulted, using “servicing agencies” (essentially asset managers) who are naturally maximising profits within the archaic and sclerotic system.
With approximately 70 per cent of the Spanish housing stock in private hands, current owners are unwilling to see changes that will affect an appreciating (on paper at least) asset. Spanish politicians lack the courage to poke that bull.
Meanwhile, the recently announced plans for a 100 per cent tax on new purchases by non-EU buyers seems a populist turn. Spaniards only have themselves to blame for the messy bed they have made; refusing to remake it with clean sheets. They can. They just need the will to do so.
Justin Jenk
Tallinn, Estonia