Spain to give young people €30,000 to rent a home with option to buy

On Monday September 15th, Pedro Sánchez announced in Congress an aid package of almost €30,000 per person that will be allocated to rent-to-own programmes for young people.

"We're going to create a new rental aid system with an option to buy of almost €30,000 so that young people can live in a permanently protected home for years and eventually acquire it," he explained.

Rent-to-buy programme

According to Spain's Ministry of Housing, the aid will be used to pay for subsidised housing, and the rent paid will be an advance payment toward the purchase.

It is also designed to prevent speculation, so if the owner wants to sell the property in the future, they must do so at an appraised price and to a person who meets the same requirements.

Rent default insurance

Another measure the package includes, which Sánchez already announced at the beginning of this year, is the rent default insurance policy for young people.

The government has promised to act as a guarantor when tenants are unable to pay their rent, which is designed to help convince landlords to rent to younger tenants.

The insurance will only cover monthly payments that do not represent more than 50 percent of the net income of the individuals or families listed on the contract.

READ ALSO: How Spain's govt will be a guarantor for defaults on rental payments

Grants for those buying rural properties

Sánchez also explained that another aid package of up to €10,800 will be provided for home purchases in rural areas, not exceeding 20 percent ​​of the purchase cost of the home. It will be granted in municipalities with 10,000 inhabitants or fewer.

The age limit for all these measures stated in the 2026-2030 State Housing Plan to promote youth emancipation will be 35 years.

More money allocated to housing budgets

The government has also said they will triple the housing budget it transfers to each region if they also commit to promoting social housing.

The government will have a "clear commitment" to "triple the money it transfers for housing policy", if each region make the same budgetary effort, Sánchez stated.

Specifically, the proposed National Housing Plan sets a target of €7 billion in investment over the next five years.

A recent study found that nearly half of Spaniards under 31 still live with their parents. The main reason behind this are the skyrocketing rents and housing costs, along with relatively low and relatively stagnant wages.

Housing prices have been rising almost constantly since 2014 and in recent years the housing crisis has spiralled out of control.

According to EAE Business School, there is also an estimated housing deficit of more than 100,000 homes in Spain.

In January of this year, Sánchez already announced 12 measures in order combat the housing crisis, including increasing the number of homes, achieving better regulation and giving more aid to those who need it.

These new measures will now be added to those in a bid to try and solve this ongoing issue.

Second Deputy PM and Minister of Labour Yolanda Díaz has actually criticised Sánchez's €30K promise for young people, stating that "rental assistance is a direct transfer into the pockets of landlords", and that "the urgent need is to lower prices, and this measure goes in the opposite direction".