‘A vicious circle’: how the roof blew off Spain’s housing crisis | Spain

Ciutat Vella, the old city of Barcelona, was once quirky and mysterious.

Now it has become a parody of itself, a place from which the local population has been exiled in the interests of tourism and maturing investments. Doorways have sprouted combination key safes, a telltale sign of an apartment given over to tourist lets. A 100-year-old apothecary and shirtmaker that stood on La Rambla for two centuries have been replaced by shops selling flamenco dolls and ceramic bulls.

Cities across Spain tell a similar story of slow transformation at the hands of property speculation and a boom in tourist flats – of high rents driving out residents and traditional businesses, and of neighbourhood stalwarts ceding to global chains, souvenir shops, burger joints and nail bars.

The statistics that explain Spain’s housing crisis are equally jarring. Rents rose by 80% over the past decade, outpacing wage increases, and a recent Bank of Spain report estimated that almost half of the Spain’s tenants spend 40% of their income on rent and utility bills, compared with an EU average of 27%.

The crisis – aggravated by the rising cost of living caused by property speculation and the boom in tourist flats – has become Spaniards’ biggest worry, and the focus of the latest policy duel between the governing socialists and their conservative opponents in the People’s party (PP).

The prime minister, Pedro Sánchez, outlined a 12-point plan in a speech last Monday to ease what he called the country’s “housing situation emergency”, noting that social housing made up only 2.5% of Spain’s total stock, compared with 14% in France and 34% in the Netherlands.

“If we don’t act, European and Spanish society will end up divided into two kinds of people,” he said. “Those who get one or more houses from their parents and can spend most of their income on things like education and travel, and those who spend their lives working to pay the rent and who end up as old people who don’t own the home they live in.”

He said Spain had lacked a state housing policy for almost a decade before he came to power in 2018, and accused his PP predecessor of gambling instead on “an ideological, neoliberal policy that had disastrous social and economical consequences”.

Sánchez, whose coalition minority government has already introduced a law allowing authorities to cap “disproportionate” rent prices in some areas, announced the transfer of 3,300 homes and 2m sq metres of land to a newly created public company to construct “thousands and thousands and thousands” of affordable social housing units for young people and families. He also proposed incentives for those who rent out empty properties at affordable prices, and higher taxes and tighter regulation for tourist flats.

Perhaps his most eye-catching initiative, however, was for the introduction of a tax of up to 100% on properties bought by non-residents from countries outside the EU, such as the UK.

“In 2023 alone non-EU residents bought about 27,000 houses and flats in Spain,” he said. “And they didn’t do it to live in them, they didn’t do it for their families to have a place to live. They did it to speculate.”

The proposal, which would have to be put before parliament and which could be challenged in court, did not go down well with certain sections of the UK press. One paper called it a “war on Brits’ holiday homes”, while another decried the “brutal tax hike”.

The PP, which had unveiled its own housing proposals the day before Sánchez’s speech based mainly on tax cuts, said it would not support the government’s “xenophobic” measure in the regions it governs.

On Sunday, Sánchez suggested he was prepared to go still further, saying his government was proposing to ban non-EU foreigners “from buying houses in our country, in cases where neither they nor their families reside here and they are just speculating with those homes”.

The past 12 months have pushed the issue of housing to the top of the political agenda. Concerns about overtourism – driven largely by its distorting effect on the housing market – led to a series of big demonstrations across Spain last year, and marches demanding affordable housing have been held in Madrid, Barcelona and other cities.

“The prime minister used the words ‘housing emergency’, and I think that’s what it is in many ways,” said Ignasi Martí, the director of Esade Business School’s social innovation unit and the head of its decent housing observatory.

“The supply isn’t there, people can’t access housing, and housing situations that just aren’t decent have become normalised over the past few years.”

So why has it taken so long for the government and the PP to offer solutions?

“Until pretty recently, all this has mainly affected vulnerable social classes, but now it’s affecting the working class and the middle class,” said Martí. “In political terms, that’s more potential voters who are being affected – middle class people realising they won’t be able to buy a flat and that renting is really hard, and people not leaving home in Spain until they reach an average age of about 31.”

He acknowledges that the 100% tax for non-resident, non-EU buyers was an attention-grabber, but Martí suspects it may be more of an ideological move than a real solution.

“It’s not going to solve the problem,” he said. “We’re talking about a number that’s not that huge, and anyway you can’t impose that on EU buyers.”

Claudio Milano, a researcher at the University of Barcelona’s social anthropology department and an expert on overtourism, said offering tax breaks to those who rent out their flats at affordable rates was not enough when there were 3.8m homes – 14% of the total supply – lying empty in Spain.

“They need to attack the problem much harder and they need to put an end to people buying flats to speculate,” he said. “That needs to stop now, and then we can start talking about tax breaks. But the fire needs to be put out before we do anything else, and to do that you need a ban on people buying flats for speculation.”

Pablo Simón, a political scientist at Madrid’s Carlos III university, said the question now was whether the socialists and the PP could agree on how best to address the housing crisis at a time of profound polarisation and within the constraints of Spain’s complex system of central, regional and municipal government.

On the plus side, he said, both parties shared the same fundamental analysis: that Spain has a basic lack of housing.

“One party is betting a little more on state intervention, and the other is betting a bit more on the market, as you would expect a party on the left and a party on the right to do,” said Simón. “But the diagnosis is relatively similar.”

Sánchez’s proposals have been coolly received in Spain’s two biggest cities. The Tenants’ Union of Madrid described them as “insufficient, misguided and cowardly”, and said the government was prioritising landlords over tenants and “betting on construction as a long-term panacea” rather than addressing the immediate emergency.

There was a similar response in Barcelona, where the rapid spread of tourist flats over the past 15 years has been a key factor in driving up rents and property prices.

Jaume Artigues, a spokesperson for the residents’ association in Barcelona’s most populous neighbourhood, the Eixample – where there is one tourist flat for every 57 inhabitants – described the proposals as vague and “very generic”. But at least the government had recognised that speculation was the main cause of the housing crisis, he said, be it tourist flats or luxury apartments sold to investors.

“The demand for more public housing hasn’t arisen because of an increase in population, but because the housing available is unaffordable, which leads to more evictions and in turn raises the demand for affordable public housing,” he said. “It’s a vicious circle, but the root of the problem is speculation.”