is the private rented market filling the role of social housing in spain? montserrat pareja-eastaway...

Is the private rented market filling the role of social housing in Spain?

Montserrat Pareja-Eastaway University of Barcelona

and Teresa Sánchez Martinez

University of Granada

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Since when?

Effects?

If so...

Why?

Outline

1. Introduction2. Approaching the private rented sector3. Social housing provision and rented

markets in Spain4. Consequences of PRM as a form of social

housing in Spain5. Conclusions

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

INTRODUCTION

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

• Decades of neglect of PR

• Particular perception of social housing provision in Spain

• Blurred edges of homeownership during expansion period

• Insecure housing in homeownership: highly exposure to financial vulnerability

• What’s the remaining role of PR in Spain?

APPROACHING THE PRIVATE RENTED SECTOR

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Tenure evolution

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Source: ESLC, 2004-2013

2008: a turning point?

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Rented sector in Catalonia: number of contracts, rent per square metre

Supply side: what counts?

more than 74 per cent (private agents), 14.7 per cent (public institutions), 1.1 per cent (non-profit institutions), 10.7 per cent (other institutions, including employers)

(EU-SILC, 2013)

the problem of vacancies

Profitability in the rented market

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Rented market returns (gross rent), public debt returns, and housing revaluation

Demand side: filling which role?

Allowing an early start in the housing career of young people. Late emancipation in Spain

Accommodating new types of households. Too scarce rented market in Spain to accommodate changes

Providing shelter to those that have recently arrived to the country. Overcrowded housing and homeownership

Alternative to homeownership for low-income households. Too scarce

Greater flexibility and mobility in the labour market. Out of the country

Stabilising housing prices. In Spain housing was left exposed to speculative market forces   ENHR Wg. Private Rented Markets

LSE, London 19th-20th March

The private rented market has progressively changed its role in the Spanish housing system towards becoming a means for ‘social’ housing provision and ‘permanent’ housing…

…clearly induced by public intervention

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

SOCIAL HOUSING PROVISION AND RENTED MARKETS IN SPAIN

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Mismatch between supply and demand of social housing in Spain

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Supply – finished dwellings – (*) and demand for subsidised housing (VPO), Catalonia, 2011-2014

Scarcity of social housing in Spain

(differences from Europe)Not a new phenomenon but a clear consequence of a long term strategy

No (rational) alternatives rather than homeownership for vulnerable households s

during expansion periods

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Rented properties being privately owned are actually socially allocated

•Social Rent Agencies (transferring private rented dwellings to social rent) have not been set up as such in Spain but ‘Mediation networks’

•Social Housing Fund created in 2013 in Spain: dwelling repossessed by banks to be used as social housing

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Private and social rent

CONSEQUENCES FOR PRMs OF PERFORMING THE ROLE OF SOCIAL HOUSING

AFTER THE CRISIS

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Housing cost overburden rate (over 40 per cent of disposable income) (*)

Source: ESLC, 2004-2013(*) The category: ‘tenant, rent at reduced price or free’ includes rent-free housing. This fact causes a clear underestimation.

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

People at risk of poverty or social exclusion (under 60% of average median income) in the private rented sector, A and B

Source: ESLC, 2004-2013

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Arrears (mortgage or rent, utility bills, or hire purchase), 2005-2012

Source: ESLC, 2004-2013

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Arrears by tenure

Source: ESLC, 2012

Evictions: total and in the rented sector

Arrears per tenure

Source: Consejo General del Poder Judicial (General Council of the Judiciary)

CONCLUSIONS

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

• The public provision of housing for vulnerable groups in Spain has functioned through the figure of homeownership, abandoning the idea of creating a decent and affordable social housing stock for those who need it. 

• The boundary between what constitutes private rental housing and social rental housing is increasingly blurred.

• The question that remains unanswered is to what extent the rented market in Spain can meet all demands considering that today it represents only 12.3 per cent of the total housing stock.

• All in all, the figures suggest a new future housing scenario with even more blurred boundaries between private rented and social housing.

ENHR Wg. Private Rented Markets LSE, London 19th-20th March

Thank you!

mpareja@ub.edu

ENHR Wg. Private Rented Markets LSE, London 19th-20th March