Transfer the Sareb's assets

To understand where we are in terms of housing, we need to take a long-term view. It is often alleged that building a public housing stock is very slow, that a lot of money is needed to have land reserves, and that many years of continuous investment would be required to reach the target of 15% affordable housing in cities. However, in a country like Spain, historically very exposed to bricks and mortar, the state has intervened on many occasions to rescue the markets: from 2008 to 2014, public and European funds were invested to save the banks and savings banks after the bursting of the real estate bubble; in 2012, Sareb was created to manage "toxic assets"; all kinds of facilities were given to SOCIMIs (real estate investment trusts), and the Urban Leasing Act (LAU) was reformed, generalizing the signing of rental contracts to only three years. A large part of those decisions explains why finding a rental home now is a miracle.The story of Sareb can be explained from a macroeconomic perspective or from the point of view of cities: these are two opposing visions. I will explain it from this local perspective.Very close to my house, in a newly created neighborhood, there is a very large plot of land with weeds, delimited by some large stones, which has been empty for years. Before, it was fields, and since the approval of a partial plan in 2002, new streets have been made that give rise to plots intended for six-story blocks, but of low density, because the buildings are very far apart from each other. Only 10% of the development is destined for social housing, as in many planning schemes of that time.The burst of the real estate bubble in 2008 caused land prices to soar as they transitioned from fields to building plots, and some developers got their fingers burned. In anticipation that prices would not return to those values, Sareb was created to prevent the correction in land and apartment prices from leading to bank failures. Thus, the plot next to my house passed into the hands of the bad bank, and many of my neighbors do not know that urban planning proposes a block for 58 apartments there. Sareb has held it in its portfolio for years and no private developer has wanted to develop it, despite it being ready-to-build land. The market has not responded as expected.In an attempt to mobilize a package of land such as the one next to my house, Sareb held a tender called the Vienna Plan, which was supposed to allow for the construction of 3,770 affordable homes throughout Spain for developers who would collect the rents for 80 years. The tender, however, remained deserted: no operator saw itself capable of promoting affordable rental apartments in dozens of different municipalities, each pending its own licensing and permit procedures, with the uncertainty of construction costs rampant due to the pandemic, and later the wars in Ukraine and Iran.

In other Catalan municipalities, on the coast, there are hundreds of buildings that passed into the hands of Sareb due to the bankruptcy of local developers. I have visited some, and they are full of rubble, with walls half-finished, wiring ripped out, no windows, vandalized and, in many cases, much more degraded than when the developers lost possession of them. In the best of cases, Sareb has boarded them up or placed anti-squatting doors, but almost fifteen years have passed and no one has taken the trouble to rehabilitate them. And an apartment without windows gets wet when it rains, suffers leaks, and its structure degrades to a point where the excel that supported the theory that the Sareb portfolio would be resold at a profit after a few years is no longer credible. Without maintenance, the assets of the bad bank have devalued even further.Lately, it has been announced that progress would be made in the transfer of assets from Sareb to the public entity Sepes, now renamed Casa 47. Theoretically, more than 40,000 homes and 2,400 plots of land with the capacity to build 55,000 new apartments (with approved planning) have been identified. Of these 40,000, one third (13,000) are located in Catalonia, and the Generalitat has signed a protocol with the ministry to manage them under usufruct (without holding ownership). At the moment, there are only 93 rental apartments in Catalonia on the new Casa 47 real estate portal. Rehabilitating all of Sareb's apartments should be a priority for the 50,000 Plan, but doing so without being the owner offers few incentives. Here there is a real opportunity to compensate for the structural investment shortages in Catalonia and to repeat the precedent of the transfers of the Instituto Nacional de Urbanización or the Instituto para la Promoción Pública de Vivienda around 1980. Because time is running out and Sareb is scheduled to be liquidated in a year, in 2027. Since its creation, the company has sold 71,000 homes, the majority in Catalonia and the Valencian Community. But Sareb's losses are already counted in the public deficit, because the entity has been unable to return the borrowed money.All mayors know which are the Sareb blocks, because problems have been accumulating there for years. In many cases, the apartment blocks and plots of land are the expression of the excesses of the real estate bubble era, conceived as second homes or in growth sectors poorly linked to urban centers. Rehabilitating this volume of housing in a short time also requires regulatory simplification and local management. It makes no sense to do it from Madrid.