Catalonia and the Basque Country urge the EU to exclude investment in affordable housing from the spending limit.

BarcelonaThe governments of Catalonia and the Basque Country presented a joint declaration on Tuesday to ensure that the first European Plan for Affordable Housing, a measure that the European Commission (EC) will present next year to establish a community strategy to resolve the housing crisis, incorporates what they consider a key measure: that investment in protected housing is left out of the European Union (EU) budget balance sheet and, therefore, states can exceed these limits - which the EU establishes annually based on economic growth - to invest in affordable housing.

This was announced at a joint press conference by the Minister of Territory, Housing and Ecological Transition of the Generalitat, Silvia Paneque, and the Minister of Housing and Urban Agenda of the Basque Country, Denis Itxaso, who leads one of the five socialist portfolios of the Socialist Party of Euskadi (2) coalition led by the PNV, winner of the last elections.

This measure, which the mayor of Barcelona, ​​​​Jaume Collboni, has already been brought before the European Commission twice Together with around fifteen mayors from European cities under the Mayors for Housing alliance, they are calling for a green light for all administrations—local, regional, and state—to be able to invest in affordable housing and be exempt from the budgetary limits set out in the EU's Stability and Growth Pact.

The only precedent for this relaxation of the spending rule occurred during the pandemic, when the EU temporarily suspended the deficit and debt rule. However, European Commission President Ursula von der Leyen announced that they are considering doing so temporarily to boost states' defense spending.

Construction Financing

While this is one of the most important demands, the joint declaration goes further and incorporates a decalogue that equates investment in housing with other strategic resources, elevating affordable housing to a "European structural policy." Among other regions, Catalonia and the Basque Country are calling for EU financing policies to adopt a convergence criterion among member states to reduce the gap. This is explained by the fact that while the European average for subsidized housing exceeds 9%, in Spain it is around 2%. "The first thing we ask for is a flexible framework adapted to the different territories," said Paneque.

Another request is for the European Investment Bank to facilitate very long-term, low-interest financing mechanisms to stimulate the renovation and construction of subsidized housing, a measure aimed at the Achilles heel of rental housing: the level of debt required and the long return on investment act as a disincentive to investment. "If you ask a developer for 75 percent social housing, the risk is that they'll say no. They end up with zero social housing and zero free housing. On paper, it sounds great, but when I explain outside the Basque Country that our law requires 70 percent, people open their eyes," Itxa said. This limit, which refers to the minimum reserve of social housing for new construction, is 50% in the areas the Generalitat wants to promote.

They have also called for prioritizing the social function of housing over speculation and for housing policy to put youth at the center. "We believe that attention must be paid to young people: the Basque Country has the latest emancipation rate in Europe and the lowest birth rate in all of Europe. The only positive outcome is migration," Itxaso argued.

Catalonia was the first territory in Spain to declare a zone of tension, which currently encompasses 271 municipalities. Other autonomous communities followed suit, such as the Basque Country, which has five declared municipalities and is currently processing the inclusion of the cities of Bilbao and Vitoria.