PODEMOS, Spain’s junior coalition government partner, propose to increase rentals to 10 years and reduce rental prices by 15%

Raymundo Larraín Nesbitt, May, 21. 2024

PODEMOS, Spain’s junior communist government coalition partner, proposes to increase rentals to 10 years and cut down rental prices by 15%

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21st of May 2024

By Raymundo Larrain

 

In previous articles and blog posts, I had (heavily) criticised Spain’s social-communist government’s housing and rentals policies.

Spain’s housing policy is non-existent. Despite being in power for over 6 years, and declaring housing as a national emergency and a priority, the fact is this administration in office has not built a single social home for aspiring homeowners who find it challenging to get hold of the first rung of the property ladder. House prices in Spain have reached an all-time high. There are vulnerable collectives that urgently need the government to address Spain’s housing problem. This government speaks a lot and does nothing. By contrast some regional governments (i.e. Madrid), which are not even ideologically aligned with the government, have built thousands of social housing destined for youth and other struggling social collectives. Classic case of much ado about nothing.

Regarding the rentals policy, the government has indeed proactively intervened approving a set of laws with a declared lofty goal of reducing rental prices. In multiple articles and blog posts, I had analysed these proposed policies and changes (which are now in force) and I concluded they would be counterproductive, even driving rental prices sharply up as in effect they would curtail the housing offer (landlords would withdraw from the market their properties). Unfortunately, I have been proven right time and again.

After enacting the new Housing Act, as was foreseeable, what happened next was that over 30% of landlords withdrew their properties from the market. Following the laws of demand and supply, the result was that rental prices skyrocketed, affecting gravely precisely those vulnerable collectives this new law sought to protect, further marginalizing them and pushing them to the edge. In most Spanish cities, rental prices have increased by over two digits in the last year alone. This sharp increase can be mostly attributed to our social-communist clumsy housing policies. The road to hell is paved with good intentions.

Not happy with such a devastating result, PODEMOS announced today it plans to push legislation to force long-term rentals to 10 years (12 years if the landlord is a legal person) AND reduce rental prices by 15%. Read like this quickly, without a second thought, it may sound (very) good on paper. Cheaper and longer rentals, whose not up for it?

However, this comes at the expense of other people's private property. When you analise the new proposal, it's in fact a very bad idea and even counterproductive.

You don’t need to be an industry insider, or even an economist, to figure out that if these proposed changes are passed as law they will translate into landlords massively withdrawing their properties from the rental market. A drastic shortage in rentals offered will drive rental prices to new historic highs.

It is blatant for all to see that the ill-advised rental policies followed by Spain's Government have greatly contributed to a huge spike in rental prices nationwide as in effect they are driving landlords out of the market (understandably afraid of these measures), reducing the number of homes on offer.

This administration has proven itself most apt at polarising society, fanning the flames of discontent and capitalising on it politically. This irresponsible attitude has even spilled over to Spain's foreign affairs, by continuously creating smoke screens with other countries (Algeria, Argentina, Israel, Russia, etc) to deflect from burning domestic political issues i.e. daily corruption scandals.

Leaders - great political leaders - strive to create unity, to bring down divisive walls.

Foreseeably, if we reach this critical point of eyewatering rentals, the government will be pushed by society to expropriate the use of empty homes and put them up for social rent at a rental price deemed ‘reasonable’ by our social-communist Overlords. In effect, a planned economy.

I understand that most career politicians are self-serving, but the proposed changes cross a red line. Such changes would unleash hell in Spain's rental market and would seriously marginalize vulnerable collectives (youngsters, elderly tenants, single mothers) forcing the government’s hand to intervene.

So, if the government (surely) knows by now that the populist laws it has been approving, one after the other, are driving rental prices sharply upwards, why on earth is it still doing it then? In short, for political gain. The larger the social discontent it sows, the more votes they garner on polling day, securing their power.

Playing the devil’s advocate, I can only surmise that this is in fact the government’s ulterior motive; to actively intervene and expropriate people's private property amidst a thundering applause of the general (misinformed) public which will wholeheartedly welcome these communist measures of 'mobilizing' (read expropriating) empty property for the 'greater good.' These clumsy set of rental laws are railroading us down a dark path which can only lead to mass expropriations. As I've written several times before, this hard-left wing government carries out social policies at the expense of other people's private property with total disregard for their constitutional rights. We've already seen how this ends in other countries (Cuba, Venezuela, etc).

It falls on the government to build and subsidize social housing, for sale or for rental, to assist ailing social collectives. Taking away from others, who've worked hard all their lives to save money and invest, is not the solution. 

Should this new proposal become law, Spain’s socialist-communist government will create a (major) problem with one hand (prohibitive rental prices no one can afford) and then offer a plausible solution with the other (expropriations), which in effect will limit citizens’ rights and liberties (seriously curtailing the right to private property), gaining even more power and control over society in the process. In Maduro's playbook, win-win.

TLDR; To sum it all up, the new proposed rental changes by PODEMOS, besides being downright stupid, will prove detrimental to vulnerable collectives, driving rental prices up the roof to new highs. This will ‘force’ the government’s hand, which will be all too eager to decisively intervene in the rental market by expropriating (or heavily taxing) empty properties.   

So much for democracy and a market economy. And this is how democracy dies, amid roaring applause.

 

Those who would give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety.” Benjamin Franklin

Benjamin Franklin (1706 – 1790). Founding Father of the United States. Exceptionally gifted statesman, scientist, inventor, diplomat, writer, printer, postmaster, and political theorist. He campaigned from early on for colonial unity, initially as an author and spokesman in London for several colonies. He was tasked to raise funds in Europe for the War of Independence. Malaga’s cathedral only has one tower (known as ‘La Manquita’), as the funds were gifted to 13 struggling colonies in their War for Independence against a mighty overseas empire. He was one of the drafters and signers of the Declaration of Independence of the 4th July 1776. Appointed as the first United States ambassador to France, he exemplified the ingenuity and prowess of a young emerging American nation.

Ben was a politician in his spare time; nobody’s perfect.

 

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