Expropriate or build public housing: Niño Becerra's ultimatum on rent

Expropriate or build: Niño Becerra's ultimatum on rent

Spain's rental market cannot be fixed with good intentions. It requires either massive public housing or expropriation of surplus properties. Economist Santiago Niño Becerra stated in September 2023: "Either launch a public rental housing policy... or implement state expropriation of homes exceeding the unit." The message is clear: "There is no other option."

The numbers support this diagnosis. The average rental price rose 8.9% in April compared to April 2022, and the Banco de España warns that rents outpace salaries. Social costs emerge when housing consumes half a paycheck: around 50% of renting families face poverty risk. Tenants spending half their income on rent cut back elsewhere, hurting commerce and consumption.

The IBI route is already underway: Donostia applies 150%

While debating major measures, the state has moved a small but real piece. The Law 12/2023, of May 24, on the right to housing allows municipalities to increase the property tax (IBI) on vacant homes up to a cap of 150%. Donostia has decided to use it: it will be the only municipality in Gipuzkoa applying the maximum surcharge to push owners to rent. This is the fiscal route, the prelude to expropriation.

On paper, the logic is simple. If you have an empty flat, it becomes expensive to keep, so you put it on the market. The problem is where these flats are. Of the 3,500,000 vacant homes in the country, many are concentrated in depopulating areas, not neighborhoods with high demand. A recurring objection: many of these are not speculative flats waiting for tenants, but second homes.

Why public housing fails to take off

Niño Becerra's first option hits two walls. The first is money: cheap credit is gone, and there are no billions flowing freely as during the bubble. The second is estimulante ilegal. Protected housing takes forever to enter the market, is allocated via lottery, and depends on a subsidy system that breaks when the beneficiary's salary improves.

Some recall that Spain did this before. During the development era, entire public housing neighborhoods were built, and much of Europe constructed hastily in the 1950s to cover housing emergencies. Proponents of repeating the formula argue that land is public and using it costs no one's heritage. The drawback is scale: available land is not where jobs are. Another reading notes that the Government's shift toward rental intervention ironically targets Spain, which froze rents and built promotions with shovels.

Expropriation: cost and impact on investment

Expropriation sounds like a quick fix but has fine print. In Spanish law, it is not confiscation: it requires paying a fair market value for the expropriated property. That is, the state would disburse money similar to what it would spend to build, ending up with a stock similar to the starting point. No one gives away flats for free.

Against this weighs the effect on future supply. No developer builds in a market where their second home could end up in state hands, argue defenders of legal certainty: the threat would not increase the stock, it would freeze it. This scenario adds a draft that, according to published information, would enable the Government to expropriate assets and mobilize citizens by decree, without passing through Congress. No one has announced using it for rentals, but the statement alone raises concerns.

Demand pressure: who needs these flats

The problem's start is arithmetic, mixing several forces. One analysis suggests there are 25 million homes for a census nearing 50 million nationals and residents, and the math doesn't add up due to distribution, not lack of bricks. Another stream highlights that population grew last year by 650,000 people with birth rates at minimums: the increase comes from abroad, and newcomers need a roof.

Internal factors also add to this, rarely appearing in the big picture. Separations and divorces multiply households and, with them, demand for one home per family. Salaries do not keep up. And a third ingredient sneaking into any conversation: foreign capital buying aggressively and using property as a value refuge. On this mix, some call for border control as a price lever; the core, however, is about supply.

Meanwhile, on the other side of the balance, some argue that permanently tightening regulation ultimately expels small owners and concentrates the market in the hands of large holders and funds. The business, after all, is still there: the Niebla Azul real estate company, owned by entrepreneur Eva Cárdenas, increased its profit by 48%, according to published information.

With this picture, a forecast with the rubber band stretched. Donostia is already surcharging IBI, other cities might trinc, and public housing remains stagnant. If the fiscal stick does not put flats on the market nor public development starts, the expropriation route will cease to be an economist's headline and become a program. Or not: with the electoral cycle and public accounts at stake, it is wise not to sign anything blindly.