BBVA and IVIE propose buying private housing with public funds for migrant social rent
BBVA and IVIE propose buying private housing with taxpayers' money for social renting to migrants. The taxpayer would pay €1,400 while the beneficiary would pay €500.
English · Original discussion in Spanish · Published
You pay €1,400 and they would pay €500: the BBVA-IVIE plan with your money
Imagine paying €1,400 a month for your mortgage or rent, while a home bought with your taxes is rented out for €500 to a newly arrived migrant. That is, in essence, the proposal put forward by BBVA Research and the IVIE: for the State to buy private housing – at market prices, mind you – to allocate it to social renting, prioritising migrants. The measure, presented as a solution to the housing crisis, has implications that go far beyond philanthropy.
Who pays for the party?
The mechanism is simple: the taxpayer – mostly Spanish and on average incomes – finances the purchase of homes that are then rented out well below market price. The difference between the real rent and the social rent is covered by the public purse. In other words, you pay €1,400 for your rent or mortgage, and on top of that you finance someone else paying €500. It is not an isolated case: the electricity social bonus works the same way, with a surcharge on every consumer's bill to cover the consumption of those labelled as vulnerable. Social engineering has a cost, and the banks do not bear it.
A precedent that smells of SAREB
The proposal revives ghosts from 2008. During the crisis, tens of billions were injected into the savings banks. Instead of keeping the homes to build a public housing stock, SAREB (Spain's bad bank) was created, which sold the good flats to friends at bargain prices and speculated with the rest. Now the proposal is to buy housing at all-time highs. When the market crashes – and it will – the State will sell for a pittance to the same old funds. The business is in the intermediation, not in the solution.
Confiscated inheritance and other measures
It is not out of the question that, to reduce the cost, a move will be made towards limiting inheritances: only the primary residence could be inherited, while second and subsequent homes would pass into state ownership. According to the analyses, this measure would enjoy broad social support among the poorest – who do not own second homes – and would serve to expand the public housing stock without direct spending. All this while mass expulsions are being discussed as an alternative, albeit politically unviable.
The debate hovers between indignation and scepticism. Is it a real solution or a new way of transferring income from the middle class to the newcomers? The only certainty is that someone will foot the bill. And it will not be the banks.
Related discussions in the forum
Imagine paying €1,400 a month for your mortgage or rent, while a home bought with your taxes is rented out for €500 to a newly arrived migrant. That is, in essence, the proposal put forward by BBVA Research and the IVIE: for the State to buy private housing – at market prices, mind you – to allocate it to social renting, prioritising migrants. The measure, presented as a solution to the housing crisis, has implications that go far beyond philanthropy.
Who pays for the party?
The mechanism is simple: the taxpayer – mostly Spanish and on average incomes – finances the purchase of homes that are then rented out well below market price. The difference between the real rent and the social rent is covered by the public purse. In other words, you pay €1,400 for your rent or mortgage, and on top of that you finance someone else paying €500. It is not an isolated case: the electricity social bonus works the same way, with a surcharge on every consumer's bill to cover the consumption of those labelled as vulnerable. Social engineering has a cost, and the banks do not bear it.
A precedent that smells of SAREB
The proposal revives ghosts from 2008. During the crisis, tens of billions were injected into the savings banks. Instead of keeping the homes to build a public housing stock, SAREB (Spain's bad bank) was created, which sold the good flats to friends at bargain prices and speculated with the rest. Now the proposal is to buy housing at all-time highs. When the market crashes – and it will – the State will sell for a pittance to the same old funds. The business is in the intermediation, not in the solution.
Confiscated inheritance and other measures
It is not out of the question that, to reduce the cost, a move will be made towards limiting inheritances: only the primary residence could be inherited, while second and subsequent homes would pass into state ownership. According to the analyses, this measure would enjoy broad social support among the poorest – who do not own second homes – and would serve to expand the public housing stock without direct spending. All this while mass expulsions are being discussed as an alternative, albeit politically unviable.
The debate hovers between indignation and scepticism. Is it a real solution or a new way of transferring income from the middle class to the newcomers? The only certainty is that someone will foot the bill. And it will not be the banks.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (87 replies).
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