Housing: a hard-to-access asset
Thousands of protesters raise their voices against rising prices and the lack of affordable options in Madrid, where the average rent rose 16% in a year and purchase rose 14.1%. Real estate law experts explore solutions to balance housing and property rights amid the urgent need for affordable housing.
by julia gil
“Housing is a right, not a business,” shouted thousands of demonstrators in the streets of Madrid, protesting against the unstoppable rise in rental prices and the shortage of affordable housing. According to the real estate portal Idealista, the average rental price in the capital has risen by 16% in the last year, while the price of homes for sale has grown by 14.1%. A situation that affects young people between 25 and 34 years of age to a greater extent and that in Spain has reached critical levels. With an average rent of 18.7 euros per square meter, Madrid leads the list, followed by the Balearic Islands (18 euros) and Catalonia (17.4 euros). The situation has escalated to such an extent that evictions for non-payment of rent now account for 75% of the total, according to the General Council of the Judiciary. But how have we reached this critical point?
CAUSES
The lack of urban land is, according to Manuel Rodríguez Caballer, founding partner of the boutique real estate and real estate financing firm Caballer, the main reason for this price escalation. As the lawyer explains, the legal processes to enable building land are long and are, in his opinion, excessively intervened, negatively affecting the creation of new housing. The increase in the demand of people who live in rentals instead of buying and selling; the decrease in the level of unemployment and the increase in job insecurity; as well as the growth of vacation rentals are other reasons that Ramón Castilla, partner of the real estate area of Squire Patton Boggs, highlights and that “have drastically reduced the supply of traditional rental housing and with it a considerable increase in prices”.
For Rodriguez Caballer, the administrative initiatives adopted by some communities should serve as a model to unblock and streamline urban development processes. In this sense, the Community of Madrid has replaced building and first occupancy licenses with responsible declarations, while the Balearic Islands has implemented urban planning collaboration entities and has eliminated habitability certificates. In addition, alternative debt funds have filled the void left by the banks after the 2008 crisis, bringing liquidity and agility to the sector. “This alternative financing model -imported from the United Kingdom- has introduced a lot of liquidity, agility and professionalism in the process of creating new housing in the country and seems to be here to stay,” highlights Rodríguez Caballer.
RIGHT TO HOUSING VS. RIGHT TO PRIVATE PROPERTY
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