Less bureaucracy and facilitating land transformation: Competition's recipe to make housing cheaper

BarcelonaLess bureaucracy, more administrative agility, and facilitating urban planning and land transformation. This is the recipe from the National Commission on Markets and Competition (CNMC) to increase housing supply and, therefore, reduce housing prices.

The CNMC has prepared a report on the high cost of housing in Spain. It highlights land as a key element, accounting for 45% of housing costs, and its difficult transformation in Spain, with a process that normally takes between 10 and 15 years.

The price and availability of housing depend on many factors, the report indicates, but one of the most relevant is the availability of land. Land can represent up to 45% of the final price of a dwelling, and in order to improve the efficiency of urban planning processes, it can contribute to reducing costs, adjusting deadlines, and expanding supply, improving access to housing, both market-rate and social, for the benefit of citizens.

The CNMC points out that Spain has one of the most restrictive land use regulations in the OECD area. In particular, the urban planning process suffers from excessive complexity, inconsistency, and legal uncertainty, as well as disproportionate rigidity or excessive administrative slowness, the report states.

Thus, it is indicated that in the planning phase, the detailed delimitation of developable land and its uses can reduce the ability to respond to changes in housing demand or other economic activities. Furthermore, the nullity of plans and the rigidity in modifying them can delay or block new developments, and planning instruments are complex, loaded with procedures and documents that can sometimes be redundant or unnecessary.

The CNMC also identifies difficulties in the urbanization phase, where the accumulation of technical and administrative procedures can extend deadlines and increase project costs. In the building phase, the multiplicity of controls and administrative requirements can delay the granting of licenses and the start of new constructions. Finally, the study warns that sectoral regulations – environmental, heritage, infrastructure, or others – have a growing weight in urban planning processes. Although these controls respond to legitimate objectives, their lack of coordination or proportionality can lead to duplication, contradictions, and further delays.

Improvement proposals

Following this diagnosis, the CNMC makes a series of proposals, including promoting greater regulatory rationalization and coordination by simplifying and consolidating urban planning regulations, and improving their digitalization and accessibility. It is also proposed to promote more cohesive and coordinated regulatory governance, and greater supramunicipal land-use planning.

Another aspect that Competencia requests is to make urban planning more flexible, by reviewing the classification of unprotected land, expanding possible land uses, and reducing the impact of urban plans on competition in other markets. Other proposed aspects include limiting the total nullity of planning and streamlining the processing of revisions and specific modifications.

The CNMC also wants to promote emergency instruments for housing, including in particular protected housing, and reduce the complexity of planning instruments and their development, processing, and approval processes; in addition to simplifying and making urban management more flexible. Finally, it also requests to facilitate building by streamlining licenses, promoting responsible declarations, and adapting building requirements and charges.