Measures against price escalation
Years ago, the big landlords landed in the big cities and many see in this landing the germ of the increase in prices
Protest against the rental market in Berlin, last April.
Updated on Wednesday, September 29, 2021 – 02:04
Housing Neither buy nor rent: the challenge of having a roof to live in when you are young Germany Berlin votes in favor of expropriating large real estate companies to curb rents
Access to housing is increasingly a first world problem that has been exacerbated by the pandemic. The unstoppable escalation of prices in large cities begins to stir up social discontent that the governments and local authorities fear that they will turn against them, that is why they begin to take action on the matter and put the large landowners in the objective of their measures.
Years ago, the big landlords landed in the big cities and many see in this landing the germ of the unstoppable rise in prices. In Spain, its massive arrival coincided with the 2008 housing bubble burst and in the last decade, the accumulated rise in rents reached 32%.
The situation in other countries and cities is similar and what happened in the Berlin referendum has made it clear that the problem is keeping all European capitals in check. Almost 57% of Berliners voted last Sunday in favor of expropriating large real estate companies so that a public house can manage rents in the city. “We have given a signal that the greats are not always going to win,” he exclaimed. Rouzbeh taheri, one of the drivers of the campaign.
The big ones are mutual funds, promoters, operators and international investors that have become the target that everyone blames: the tenants, because they accuse them of encouraging speculation and price escalation, and political powers, because they derive part of their own responsibility for housing.
“The politicians put the weight on the large landowners and establish measures whose effectiveness has not been demonstrated, neither in Catalonia, nor in Berlin nor in any other place where they have been implemented,” he points out. Beatriz Toribio, CEO of Asval (Association of Rental Home Owners). Toribio advocates measures that encourage supply, provide legal security and stimulate public-private collaboration to increase the available housing stock, and also vindicates the role of large holders in the market. “They are not the problem, but part of the solution,” he assures THE WORLD.
The Berlin referendum is not politically binding, although it does allow for increased pressure on the next government team in the city hall. This symbolic value gives hope to social movements in other parts of the world that demand greater pressure on the large holders to alleviate the problem of rent.
“The result in Berlin has a lot of power and could serve as a stimulus for the political class to feel challenged and consider measures that a priori would not have been considered “, he points out Fernando Barrera, spokesperson for the Union of Tenants and Tenants of Madrid.
This social pressure is increasing and begins to condition political decisions that have little to do with housing. We have the closest example in Spain, where the discrepancies between the Government partners regarding the future Housing Law and the limitation of rents is conditioning the negotiation of the General Budgets for 2022.
PSOE and Unidas Podemos continue to be distanced by the regulation of income, since the formation of Ione Belarra it demands a direct intervention in prices to which the Socialists refuse. The disagreement is such that UP will register this Thursday in Congress a proposal for a Law for the Guarantee of the Right to Housing prepared by a group of civil organizations that advocates, among other things, for the expropriation of large holders and sanctions against the empty house.
“If the administrations, instead of assuming their responsibility, continue to attack the low profitability of the rent and also create legal insecurity, the consequences will be a flight from institutional and private savings of this asset class and a further worsening of the situation,” he warns Fernando Lacadena, President of Asipa, the Association of Real Estate Companies with Rental Assets.
Inside or outside of Spain, the political and legislative dilemmas of the administrations are the same: regulate or not regulate prices, expropriate or not properties from large holders, sanction or not vacant houses… None of the options has so far yielded the expected results.
On Catalonia, where the Rent Containment Law has just reached its first year in force, it has reduced the supply by 40% and prices have fallen less than in other places such as Madrid, where rents are not intervened.
In the Netherlands, the housing problem has also reached the front line of politics. The first Minister Mark Rutte It is reluctant to give in to the claims of the left-wing parties, which are calling for the abolition of the tax on large owners of social rental housing so that they use that money to build new affordable rental housing.
The tax reports about 1,800 million euros to the public coffers and Rutte is reluctant to give them up, but on the housing side, the tribute has not only failed to alleviate the problem, it has ended up strangling the market for lower-income apartments. That is, it has had an effect contrary to what is intended.
As explained in the Idealista portal, the Netherlands market is divided between social or regulated rents -which are applied for incomes below 750 euros per month- and the free market.
Since 2013, large owners (more than 50 flats) that offer social rentals pay a tax with which the State intends to promote the construction of houses and the free rental market. But the demand continues to increase, and with it the waiting lists for access to social rental flats have also grown. The free market has not grown at a sufficient rate to respond either and that has ended up causing prices to skyrocket, especially during the pandemic.
The Swedish case
In Sweden, rent control has been a reality since the end of the Second World War But the increase in demand in the big cities is putting the system in question. In Stockholm and other large cities in the country, rent control is established through negotiation between tenant associations and owners associations.
Any citizen can opt for a home in this regime and once the contract is achieved, it belongs to the tenant for life. This has generated waiting lists that in the capital are already nine years late on average and traffic jams have led to a black market for subleasing that has triggered rents.
The pressure is such that the center-left government last summer presented a proposal to liberalize the rental of new homes, although the current system of collective bargaining would be maintained for existing ones.
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