Permissive squatters’ laws, excessive bureaucracy, and rigid urban planning are destroying the supply. Rent and apartments for young adults cost nearly all of their salary.
Since the 2008 crisis, the Spanish real estate market has become a nightmare, especially for young adults seeking independence. The average age for achieving this is 30, and the issue behind this statistic is the high cost of buying and renting apartments.
The most common salary among Spanish citizens is €14,586. Renting a room in cities like Madrid or Barcelona costs an average of €500. A full apartment costs over €1,000 per month. Buying a house might seem like the ideal solution, as it is 12% cheaper than it was 15 years ago, but it comes with the same problem as the other two options: the entry fee is excessively high. To buy a house, you need, on average, to spend your entire salary for over four and a half years.
The issue with the entry fee has a clear cause: the squatters’ laws. Under current laws, accessing a property, whether legally or illegally, turns an apartment into your home. This grants you, according to Article 18 of the Spanish Constitution, the right to privacy, the right not to be evicted without a court order, and the right to access housing utilities such as water, electricity, and gas. If the owner, due to illegal access to the apartment or non-payment of rent, decides to change the locks or cut off the utilities, they could be charged with the crime of duress, punishable by up to three years in prison. If the owner forcibly enters the property, they would be committing a more serious offence, breaking and entering, which carries a prison sentence of up to four years.
This law is a blatant violation of private property rights and creates insecurity for property owners. However, the Spanish labour market is highly unstable. They need to ensure that if someone loses their job, they can still afford the rent. If not, they cannot evict them. As a result, the conditions are almost impossible to meet. To rent an apartment in Madrid for a one-year contract, you need to provide two payslips and pay three or four months’ rent in advance.
Another significant issue is the lack of supply due to the limited construction of housing. First, excessive bureaucracy is a major factor. Processing times are unbearable. Foreign investments and demands face legal uncertainty, and approving urban projects due to land-related issues could take 20 or 30 years. Furthermore, fewer people are willing to work in construction. The rising cost of materials, inflation, and the aging workforce have led to job insecurity, low wages, and a lack of appeal for younger people to pursue a career in the sector.
This is not only a problem for Spaniards looking for a house. Foreigners seeking vacation homes also have to deal with some of these inconveniences, with the biggest one being taxes. Buying a new home means paying 10% VAT if it is a new dwelling. If it is just a transfer, you don’t get rid of it; you need to pay, depending on the autonomous community, at least 6%. And, of course, there is also a 1.5% tax on legal acts. In other words, prices increase by almost 17% in the best case, raising the value of the houses. And this is just to buy it. In order to maintain it, we can’t forget about the real estate tax, 19% for owners who live in the country and 24% for foreigners.
Instead of addressing these problems, the Spanish government is considering implementing populist measures that will not resolve anything: limiting rent prices and providing tax benefits for lower prices. This will not fix the insecurity or the supply shortage. They need to rethink their approach.
Victoria Esperanza Pazos Álvarez is a policy fellow with Young Voices Europe. She previously studied international relations in Spain and specialised in disaster risk reduction in the Netherlands. Victoria formerly worked at the Spanish embassy in Buenos Aires, where she worked on trade negotiations.