MADRID, April 18 (Reuters) – Spain aims to help millions of young adults still living with their parents rent their own homes by offering them properties abandoned when its property market collapsed a decade ago.
The rising cost of rent will become a key campaign issue as Spain prepares for regional elections on May 28 and general elections later this year. Only 16% of young people in Spain live independently, compared to an average of 32% in Europe, according to the Emancipation Observatory.
The government on Tuesday approved plans to make up to 50,000 repossessed homes held by Spanish bad bank Sareb available for affordable rental. He also struck a deal with his allies in parliament last week to push through a bill that will introduce rent caps of 3% a year in areas where rents are rising significantly.
Economy Minister Nadia Calviño said the government is trying to increase the supply of public housing, which at 300,000 homes represents only 3% of total housing, compared to 9% in the European Union.
“The young and the not so young cannot pay their rental apartments,” the Minister of Housing, Raquel Sánchez, stated on Antena 3 about Sareb’s plan to reuse toxic assets. “We believe it is a measure that will work and it is not the only one we are going to put on the table.”
High rents are a particular problem in the Balearic and Canary archipelagos and on the Mediterranean coast, where short-term rental properties for tourists and foreign buyers are limiting supply. In Malaga, in southern Spain, rents rose 20.4% as availability fell 27% in the first quarter from a year earlier, according to housing search website Idealista.com.
Antonio Garamendi, president of the Spanish employers’ association CEOE, said that the “populist and interventionist” measures of the housing bill would not resolve the increase in rental prices but would “cause the opposite of what is intended.”
Offering foreclosed homes smacks of politics to attract votes rather than being a solution to the shortage of social housing in Spain, since many are likely to be found in so-called “ghost” towns where no one wants to live, said Javier Díaz Izquierdo, an analyst. Renta 4 bank real estate.
“Why not just make my life easier in whatever home I choose?” Díaz Izquierdo said.
Sareb was created in 2012 to take over more than 50 billion euros ($54.85 billion) in real estate and other toxic assets from former savings banks that collapsed after the bursting of a real estate bubble.
Although the government has said that up to 50,000 homes will be made available, in reality only 9,000 are almost ready to rent. In addition, it has identified 112 plots of land on which 10,000 new homes can be built initially and 5,000 more in the future.
Another 14,000 homes that are already inhabited could also benefit from the social rental program, according to Sareb.
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Reporting by Charlie Devereux and Jesús Aguado; additional reporting by Emma Pinedo; Editing by Sharon Singleton
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