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RENTING

Spain needs to build 1.2 million affordable rental homes in a decade

The current shortage of housing in some areas of Spain means that 761,000 affordable rental properties and 442,000 social housing units need to be built in the next 10 years to meet demand, a new study has warned.

Published: 25 October 2023 13:24 CEST
Spain needs to build 1.2 million affordable rental homes in a decade
Construction of more homes is needed to meet demand in Spain. Photo: CESAR MANSO / AFP

According to a new report by real estate developer Culmia in conjunction with social research and consulting firm Gad3, around 761,000 new well-priced rental properties will be needed over the next decade to meet demand in Spain, plus an additional 442,000 social housing units.

The report specifies that this will be needed to satisfy demand, relax current market prices, and reduce the amount that households currently allocate to rent, which is currently on average 40 percent of their income.

The investment required to undertake these new developments stands at €108 billion (approximately €142,000 per home), of which 76 percent would come from private investment and only 24 percent from the public sector.

By region, Catalonia, Madrid, Andalusia and Valencia are the ones that require the most affordable housing and are also among the most populated.

Catalonia is the region that will need the most housing to meet demand, with a total of 225,000 reasonably priced rental homes in the next ten years. This will require a public investment of €1.01 billion, according to the report, due to the fact that private investment there is higher. 

READ ALSO: Why there are half a million new homes in Spain that no one wants to buy

This is much less than what is needed in the region of Madrid, despite the fact that it will cost the capital region more. According to the report, the Madrid region needs 174,000 new affordable rental homes in the next decade, with a public investment that will reach €5.4 billion.

Andalusia is another region that requires more affordable rental housing. The 85,000 new units needed there will require an investment of €4.5 billion.

Valencia follows, also with 85,000 homes needed and an investment of €3.2 billion. Finally, the Canary Islands will need 46,000 homes with an investment of €2.4 billion.

Housing production in Spain has fallen by 86 percent compared to its highest rate in 2006. Around 80,000 homes are built per year and the national market is near the bottom of Europe in terms of public housing construction.

Of the total housing production, only 10 percent corresponds to protected housing and of that percentage, the majority (80 percent) comes solely from private investment.

READ ALSO: How Spain plans to address its huge lack of social housing

The report shows that if the same investment was given by the government, public and private collaboration would increase the production of public housing by 72 percent, going from 442,000 affordable homes to 761,000.

The creation of 150,000 new homes per year is expected in the most populated municipalities of the country, meaning that every year there will be a deficit of 20,000 affordable homes in certain areas. 

According to the report entitled ‘Access to Housing and Affordable Rental Needs’, those households with salaries between €1,000 and €2,000 per month are those that have the highest degree of vulnerability, with a disproportionate amount of their salary going to rent –  50 percent in some cases. It is this group that will be the main beneficiaries of these new affordable homes.

The lack of 1.2 million rental properties does seem high, and Culmia does have vested interests in such a gargantuan task as one of the main developers in social housing in the country, but similar studies such as that conducted by Atlas Real Estate Analytics in 2023 put the figure needed as even higher: 1.83 million units.

One of the main paradoxes is that Spain does have many empty properties, but they are not located in the provinces that need them.

For example, in the provinces of Ourense, Ferrol, and Ponferrada in Galicia and Ciudad Real in Castilla-La Mancha, in addition to their surroundings, there is actually a surplus of houses.

READ ALSO: What are Spain’s plans to charge owners of empty homes more tax?

A report by UVE Valoraciones, a society associated with the Bank of Spain, states that there are 433,000 empty houses in Spain, but there are 13 provinces in the country that have a shortage of properties.

“Lack of housing is not a national problem, it is a problem in certain areas,” says Germán Pérez Barrio, president of the appraiser who authored the UVE report.

READ ALSO – Renting in Spain: Why it’s become very hard to find a flat to share

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PROPERTY

How Spain’s Balearics will legalise thousands of properties built on rural land

The regional government of the Balearic Islands is preparing a decree law that will allow the regularisation of more than 30,000 homes which were illegally built over the years on rural land.

Published: 24 April 2024 12:16 CEST
How Spain's Balearics will legalise thousands of properties built on rural land

In Mallorca alone, it is estimated that there may be around 30,000 of these illegal homes, but there are also several in neighbouring Menorca, Ibiza and Formentera.

In Spain land is distributed into three categories: urbano, urbanizable and rústico.

Urbano land has official municipal accreditation for residential properties to be built on it, urbanizable is theoretically meant for residential purposes but needs accreditation and often isn’t connected to the water, sewage or electricity grid yet, and rústico is rural land where residential properties cannot be built, also called no urbanizable. 

READ ALSO: Where can you build on rural (rústico) land in Spain?

What’s the problem?

The situation in the Balearics is that thousands of properties were built illegally on this terreno rústico or rural land and as a result could either not be sold or owners were prevented from carrying out any maintenance work on them at all, allowing them to degrade over time.

However, the sanctioning of these buildings have now expired, so the urban authorities cannot order their demolition, but at the same time owners cannot improve them or do them up, rendering most of them useless.

With the current housing crisis and lack of affordable properties on the islands, something had to be done to rectify the situation.

The vice president of the Balearic Islands, Antoni Costa, has assured residents that the time has come to stop looking the other way and has promised to address the problem head-on.

READ ALSO: Why you should think twice before buying a coastal property in Spain

What will the new law aim to do?

The new decree law that regional president Marga Prohens aims to bring into force will allow these homes to be legal.

In exchange, the owners must pay a financial penalty proportional to the cost of the illegal construction work. This will most likely be 15 percent of the value of the work, although this hasn’t been finalised yet.

This means that swimming pools, verandas and other illegally built elements may also need to be legalised. Property owners will also have to meet new energy and water efficiency standards for their buildings.

It’s most likely that this will be carried out in a process similar to the Company Law, approved a few years ago. This will mean that the legalisation works must be approved by an architect, who will also carry out the economic valuation of the work.

Historically, rural or rustic land in the Balearic Islands has been highly desirable as urban planning pressure moved from the coasts to the interior of the islands. A series of restrictive laws and regulations aimed to put a stop to this. For example, in Menorca it is prohibited to give residential use to rural land.

READ ALSO: The Balearics’ new housing law explained

What problems might they face?

Opposition parties in the Balearic islands have rejected the proposed plans, complaining that offenders will be rewarded and will now be able to sell their houses at a much higher price than they would have done.

Initial reports suggest that owners will be able to sell their properties once they’ve be legalised, but they may be prohibited from turning them into tourist rentals. Vice President Antoni Costa confirmed that most likely, these homes will not be able to be used by tourists.

In order to make the urban planning process more efficient, these buildings will no longer have to obtain a cédula de habitabilidad or certificate of habitability. However, they will still have to get a municipal license.

The Vice President defended the plan saying that these measures would contribute to solving the housing problem insisting there would be “new housing as soon as possible”.

READ ALSO: How to get Spain’s certificate of liveability for properties

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