Renting or owning? The great debate that will define Spain's future

As the bottlenecks of the housing problem narrow, politicians and activists are emerging with bold messages about how to solve an issue so vast in scope that what we're really talking about is a complete overhaul of the Spanish social contract.

The current situation is a mixture of a crisis that paralyzed construction and the outcome of the votes from 1978 to 2008. Therefore, changing the model implies dismantling a system that cuts across ideologies and has shaped the behavior of three generations.

This change in the social contract aims to ensure that in the future a significant portion of the population will live in affordable rental housing. Housing will cease to be a means of family savings and become a subjective right. It will become the " fifth pillar of the Welfare State ," alongside pensions, healthcare, education, and long-term care.

Instead of distributed ownership, in the future we would have a concentrated pie with a strong presence of the public sector. To move toward this model, many voices emphasize the importance of generating a public stock of affordable rental housing, as in Europe. A model that breaks with the traditional Spanish model of assistance in acquiring homeownership or social housing. But nuances are important, and the truth lies in the gray areas. Therefore, today we will attempt to shed light on the traditional Spanish affordable housing policy.

Spanish Revolution and change of direction

Broadly speaking, during Rajoy's years in government, the PSOE decided to make a complete amendment to its pre-2007 housing model. This system had distributed property ownership in Spain to millions of people over three generations, ever since the Falangist minister Arrese made it widespread in the middle of the last century.

For almost three decades, the PSOE embraced this model. It redesigned it, incentivized it, and its voters rewarded it for it. It consisted of lifting the dispossessed out of the mud, giving them decent home ownership, and then, after thirty years , converting that property from "protected" (VPO) to "free." Never in Spain had there been a greater transfer of income from rich to poor than from the mid-1950s until 2007. Capital gains became the driving force of the social elevator toward the middle class. This was the great agrarian reform that was long overdue, the great distribution of land that had been pending since 1835.

If in 1950 there were just over 2,000 homeowners in Madrid, by the turn of the century homeowners exceeded 80% of the population. The revolution, therefore, wasn't the physical construction of hundreds of thousands of buildings, as was also the case in Europe after the postwar period. The revolution was the deeds to the house . That's what sets us apart from our neighbors. Here, the majority of the population has something to hold on to when things go wrong, or when the authorities can't provide adequate maintenance for their housing stock. Something that's not impossible, as demonstrated today with the electricity, the light, the trains...

As in the rest of the continent, urban planning reserves land for affordable housing, but most of it was privately owned and subsidized. In other words, a good portion of these social housing developments were promoted by the private sector but subsidized. Everything worked. There was credit, apartments, and construction workers until, in 2008, the pedals stopped.

But then the crisis came, international credit was limited, mortgage guarantees were established, which excluded young people without savings from purchasing, many construction companies closed, a labor shortage problem was created, and excessive legislation was passed , making development and promotion processes more expensive and eternal, which had an impact on final prices, with an enormous loss of purchasing power for families and young people.

And while construction remains unfinished, bottlenecks continue to grow, with no real solution, creating a two-speed society: owners and future heirs in large cities, and everyone else. Therefore, the shift toward rental models is a response to the collective Argentinization of our society, with future consequences for both rich and poor. Anyone interested in delving deeper into this evolution should read the book soon to be published by sociologist and El País columnist Jorge Galindo .

Let's understand one thing: if the PSOE is a progressive party today and not a progressive party, it's because it renounces all the good it did, all the homes it owned, and all the social justice it created. If it previously sought to create free citizens, today it seeks to create clients of the State and its partners, the big managers of "regulated assets."

Gentrification in the centers and peripheries

One of the problems with wanting to resemble Europe is overlooking what sets us apart. For example, the processes of gentrification , which have been extensively studied in the last decade by sociologists and politically prominent research groups. And although these studies served as a basis for the discourse of some parties, the results show that the message didn't resonate. There wasn't a critical mass. And there wasn't one because, in most cases, these were visions imported from Anglo-Saxon universities. What was happening in Manhattan or Berlin was also expected to happen in Madrid or Valencia. But the social pain wasn't what was expected and, therefore, didn't translate into votes. What's more, the paradox was that many of those protesting against gentrification were the same people gentrifying because they couldn't give up the trendy café in the bohemian neighborhood.

These same scholars ignored what was happening in the outskirts of European cities, because the findings of degradation could point directly to immigrants and the shortcomings of bureaucracy when it came to improving neighborhoods, public services, and residential buildings.

Furthermore, while degrowth was on the rise in Spain, with Barcelona at the forefront, the European response to the housing and suburban problems was moving in a different direction.

In Europe, we don't shrink . We build. It doesn't matter whether it's in Vienna, Stockholm, or Paris.

If, instead of trying to emulate European data, they had focused on what was changing, they would have seen that wherever the percentage of renters exceeded 50%, Europeans have dedicated themselves to increasing their homeownership. Yes, even in Vienna.

They do it for several reasons:

1. Over the last decade, many Northern Europeans shifted their savings to real estate, taking advantage of zero interest rates. Banks weren't earning money, the economy was booming, and homes were a very lucrative financial vehicle .

2. Dark clouds were looming on the horizon, but they were now here. A more uncertain and turbulent world. It was beginning to make a lot of sense to leave an inheritance to children who would no longer live better than their parents . This is the way of a West that doesn't see the future clearly.

3. Last but not least, the rise in inequality revealed the vulnerability of tenants to the widespread processes of gentrification and ghettoization in most cities on the continent. This impact was positive for landlords and negative for tenants, who were relegated to ghettos where the majority of the low-income population, those displaced from the now prohibitively expensive centers, and a growing number of immigrants were concentrated.

What sets us apart from Europe and Brooklyn is that having over 70% homeownership means that gentrification has benefited many more than it has harmed, and many of those who continue to benefit now were born in the dust and mud upon which the houses that sell for so much today are built. The conclusion that bewilders those who put ideology before reality is that our suburbs have not degraded in the same way as those of other large cities because the owner seeks order, peace, and added value . This invites one to wonder whether, if residents stop seeking that added value, the resulting effect would be the degradation that has occurred in many parts of Europe.

That's why it's time for us to realize that the great success of Spanish society in the 20th century, the great miracle , is our peripheries, and that for that reason alone it's worth giving the so-called '78 regime an A+.

Having over 70% homeownership means that gentrification has benefited many more people than it has harmed.

Because throughout their lives, most of its residents saw their standard of living rise —often indexed to improvements in the quality of their neighborhood—and with it, the price of their homes, which are now on the open market. When they retire, they've seen how the system that gave them a home and for which they voted since 1978 has worked. Today, their children can inherit or capitalize on that home and enjoy a comfortable old age. "Working-class" neighborhoods like Orcasitas , in Madrid, already have prices close to €2,000 per square meter . That's why they're now receiving the returns the PSOE and PP promised them when they voted for them. Was that wrong? What neighbor today would be willing to return their property or reclassify it as protected? No one, no matter who votes.

The success of a homeownership society lies in its strong alignment between personal and collective interests. The prospect of a better, more prosperous future for you and your family lies in a pleasant, beautiful, and safe neighborhood. And in spending the tax money generated by this society on facilitating access to a property that no one can evict you from. And that's why, despite their problems, our suburbs are better than those of London, Frankfurt, Paris, Rome, or Copenhagen.

A clear example can be found in the French capital. No matter how many improvements they make, how much money they invest, no matter how many Olympics partially improve the environment, they still have the banlieues , a failed state just a few kilometers from the Élysée Palace. The Republic has failed there. And the problem isn't the skin color or the values ​​of its inhabitants. It's that social housing isn't synonymous with roots or planning for a prosperous future for your family, but with perpetual precariousness.

According to data from the French National Institute of Statistics , in 2023 the percentage of homeownership in the Parisian banlieues was much lower than the national average (20-35% compared to the national average of 58-60%). And the precariousness in these places is perpetual, because a large proportion of its inhabitants, in addition to living in rented accommodation in one of the most expensive megalopolises in Europe, have an average income that barely reaches 60% (Saint Denis €20,000) of the national average salary of €36,500. A society that is given the option to pay rent, but not to buy a home, is a perpetually precarious society . And these problems fester in these gigantic cities, threatening the collapse of the system. And then the Malthusians appear with their degrowth alternatives, and the next thing to come is Le Penism and its proposals for demographic decline: "Housing is a finite resource and must be made sustainable. There isn't enough for everyone." All of these proposals are self-induced poverty, starting with the most precarious.

Of all the European cases, perhaps the most extreme is Denmark. Over the last decade, successive governments in Copenhagen have created areas officially known as "ghettos" in the suburbs. Aside from the controversial policy of cultural assimilation with immigrants, one of the most important measures being implemented within these ghettos is precisely changing the mix of social rental housing, encouraging residents to access homeownership, and encouraging young Danes to purchase new homes in these neighborhoods.

The Spanish case and the thirst for reforms

First of all, it's important to make clear that there are no one-size-fits-all solutions , and that, in a serious debate, the first thing politicians from all parties should tell us is what their optimal mix goal is for our country. What is an appropriate ratio between "free" homeowners, "capped" homeowners, "capped" tenants, and beneficiaries of public housing? They should then propose clear criteria for who, when, and how will access the housing we will all pay for.

But it's very difficult to solve the housing problem in the short term. Whether it's due to the industrial inability to build, the lack of flexibility in rents, legal uncertainty, or the dogmatism of some people. The reality is that everything will have to be done everywhere, and in each place, in a tailored way. That's why it's important not to be blinded by recipes that promise to be the solution but are actually a poisoned remedy.

Broadly speaking, it would be interesting to consider densifying city centers with affordable rentals , because there is already enough social mix there to prevent the creation of ghettos, and these homes would mitigate rising prices in the neighborhoods.

It would be interesting to think about densifying city centers with affordable rents.

On the other hand, in suburban neighborhoods, rentals and co-living may make sense, but above all, social housing makes sense. Social housing is protected in perpetuity (on public land) and non-discriminatory housing (on private land). It's also important that today's immigrants also have access to these properties, even if they arrive from across the ocean, just as those who arrived from the countryside more than half a century ago had access to them. This is important because the gray matter we need in our cities to develop in the knowledge economy is there. In the mix, not in the purity. And we must find it and give it opportunities.

So, be careful not to try to be so similar to Europe , lest we also import what doesn't work properly. Because while we want to be like the Nordic countries, or the Viennese, they see our model as a solution to the huge problems they already have.