Spain turns to Europe in bid to tackle housing crisis

Access to housing has become a structural challenge throughout Europe, where different countries have applied their own approaches to alleviate the housing deficit and the unstoppable escalation of prices that Spain practically leads, with a rise of 12.8% in the second quarter - more than double the EU average.

The supply problem is evident. The Bank of Spain calculates a shortfall of 700,000 homes to cover existing demand. "The demand for housing remains at high levels (around 300,000 new homes in 2025) and more than doubles new supply," Funcas analysts state.

According to economist Ignacio de la Torre, one of the biggest problems are the development and land qualification periods, which vary between ten and 20 years in Spain. In contrast, Germany has managed to reduce them to three or five years by applying advanced technology.

Spain's government keeps looking at policies to control prices and promote affordable housing. According to KPMG's Carlos Bardavío, for rent to be affordable, authorities must focus on "encouraging supply, providing legal certainty to landlords and special tax incentives for those who rent to vulnerable groups".

One of Spain's ideas is to ask Brussels to assess measures and help the government. Although the EU does not have competence in this field, its policies serve as a guide, especially since the Commission is currently finalising a European plan for affordable housing for the first time ever. This plan is expected around the end of the year.

Sectors and authorities are split between measures. Spain's PM Pedro Sánchez has called for action on short-term tourist rentals and, above all, for legal backing to restrict the purchase of homes that are not intended for residential use. This could also facilitate his plan to additionally tax second homes, which is already done in countries such as the UK, where the so-called 'stamp duty' charges property owners with more than one home a rate of up to 17% on transactions exceeding 1.5 million. First-time homeowners are exempt.

It should be noted, however, that Spain already has one of the highest tax rates in the EU. According to IEE data, effective taxation on home ownership is around 30%, compared to an EU average of 6.5%.

If we look at European examples, we can see that some countries have prioritised young people. As Funcas analyst Miguel Ángel González Simón explains, Denmark focuses on providing young people with homes that are smaller in size but affordable. "These policies have helped make the average age of leaving home in Denmark one of the lowest in the EU and a similar approach in Spain could be implemented through agreements between regional authorities and universities," he says.

Price control is applied in some areas of Germany and France, although its effectiveness is doubtful. Most studies on the subject state that, yes, prices have fallen, but so has the number of homes for rent. Experts point to the greater power of other measures such as those applied in the Netherlands, where the maximum price of a monthly rent is determined by a points system, according to the quality of the property (its size, location, equipment, proximity to means of transport or shops, etc.).

The Netherlands is also an example of successful social housing policies, with a weight of 29% of the total, compared to around 3% in Spain. "Since 1995, the promoters of this housing have been financially independent of the state, although they benefit from a favourable system, which mobilises private capital," experts say. In Germany, where 50% of homes are rented (80% in Berlin), the key to building more social housing has been digitalisation for licensing processes, while France sets national targets for the provision of affordable housing through a law, which obliges municipalities to have a minimum supply of social housing for vulnerable groups.

"Its legally binding nature and the existence of a sanctions regime for those who fail to comply serve as mechanisms to align action across different levels of government," Funcas points out. According to the organisation, Spain should focus on successful examples in the following areas: administrative simplification and the implementation of a comprehensive digitalised system; the development of specific financial instruments for affordable housing; and mechanisms that help coordination between administrations.