The risk of returning to the brick economy
The PP proposes 14 measures to build a million homes (it is not known if they are market-rate or affordable). One of the measures is the approval of a new land law that provides security for urban planning. Oh, how we have no memory. This formula was already tested and led to a regrettable involution of the precarious science of cities: between 1998 and 2006, 5.5 million homes were built in Spain by liberalizing land. In Catalonia, a territory equivalent to 3% of its surface area was urbanized; in Madrid, they ended up consuming 7.46% of the land of the entire region. And housing prices, despite the historical surplus of apartments, grew by 185%. When the bubble burst, it was not only the tenants who suffered: a good portion of the homeowners faced losses if they had to sell their homes because the correction in apartment prices deflated overnight. And who made a fortune? The owners of fields and rustic land on the outskirts of cities, who had been accumulating land where they knew planning would enable new neighborhoods. There must already be someone making selective purchases around the cities in case Feijóo finally becomes president.
And they cannot say they did not know. Even the 1956 land law, in the midst of the Franco dictatorship, was founded on principles contrary to the liberalization of land; it was made precisely to avoid “the retention of land by owners who do not urbanize or build, nor agree to alienate their land to urbanize it and build on it at fair valuation prices”. Even then, a land valuation system was proposed designed to avoid excessive capital gains, so that it would revert “in large part to the community, through the prior application of the appropriate tax treatment”.
For years I have argued that, in addition to rehabilitation, it is necessary to build affordable housing, although for many years, precisely because of the 2008 crisis, this has been anathema to the left. All European countries apply strong restrictions on the classification of land as buildable, because opportunism and speculation have destroyed the peripheries of many cities. We must learn from the mistakes of the past and combat two things: excessive profits from land sales and the lack of foresight in the creation of land reserves. A large part of European public developers buy the land where city growth is to take place before approving plans, precisely to avoid the enrichment of certain landowners.
Cuts have consequences: in 2013, the Community of Madrid, governed by the PP, sold 2,935 public housing units to the Goldman Sachs fund to obtain immediate liquidity. It was considered that Madrid did not need these public apartments.
A few days ago, a lady visibly distressed because an investment fund had just evicted her came to the Balearic Parliament and reproached the deputy Marga Prohens: "I voted for you." The objectives of certain laws and the lack of public leadership in housing matters have terrible consequences for family economies. With the current housing situation, it is surprising that no one from the PP has engaged in self-criticism regarding the bubble years. Spain developed a poorly productive and precarious economy, based on the belief that the market would regulate itself and that the private sector would provide the housing that families were buying fundamentally as savings. Cities still have visible remnants of the bubble's impact: urbanized streets on the periphery left half-finished, vacant lots for years, and concrete structures that have been abandoned skeletons for fifteen years. Have we learned nothing from all of that?
The public conversation has been evolving, and polls indicate that there is a state of opinion favorable to the regulation of short-term rentals and the construction of a public stock of affordable rental housing in the medium term. This requires a long-term vision and equipping the public sector with resources to prevent land speculation. It is indeed necessary to build, but not just anywhere, nor at any price. If there is to be a new land law, it should be to prevent speculation in land transfer, mobilize all the empty lots that already exist, avoid land hoarding during high-demand cycles, facilitate expropriation mechanisms to establish public land assets, and define binding obligations for municipalities to provide the public housing that is appropriate, without excuses. And to think about how money will be invested in the public purchase of land, and how it will be recovered through social rents, after three decades.
