Spanish National Commission for Competition and Land Liberalization. Solution or New Wink at the Banks?

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The Commission’s report is correct about that Spanish Urbanism needs a revision to streamline and simplify its planning and management, and on the need of relaxing the location rules of uses and intensities. It is also true that local authorities often encourage speculative processes instead of take control of them, and are also guilty of lack of transparency. And it is real that the land market has failures that make it susceptible to speculation and rising prices.

The CNC proposes to leave the provision of land in the hands of supply and demand game, eliminating market failures by the withdrawal of the state. It reveals an economistic view suggesting that competition prevails over the right to the city, the right to housing, the orderly development and cultural identities, among other things. It cites USA land market as an example of a functional market, forgetting its sprawl, the degraded city centers, the insustainability and the dominance of cars over all things. It even argues that the existence of public facilities and public spaces should depend not to ensure quality of life, but not to cause a loss in terms of opportunity cost, compared to allocate these floors to private uses. However, the reality of Spanish cities is the glaring failure of the amenities and public spaces.
However, the problem is deeper than the mere existence of market failures because the legislation is complicated, maturities are long, citizens and entrepreneurs are speculators and government too. The question, and this is what the Commission’s report does not include is that the roots of the problem are in the shaping of the welfare state in Spain: in the rest of European Union the right to housing is part of the remaining pieces of the welfare state, but not in Spain. This fake “right ” appears in the Spanish Constitution as a mere guiding principle and thus, our public rental housing park is low as 1 % of homes in the country , while in France reaches 17 %, in the UK gets near 20 % , and 30% in the Netherlands. The worst thing about it is that this is a conscious neglect, started during the Franco’s regime and perpetuated by all democratic governments, who have used real estate speculation as one of the engines of economy.

The report does not explain who benefits by its proposals, such as eliminating the difference between buildable soil and rural land, resultingthat they will be in much financial entities which own soils coming from supporting frustrated real estate developments on rural properties, soils that have been largely absorbed by the SAREB.

Faced with the proposition to turn the entire soil in buildable land, deregulate urban planning and take off power to the municipalities, it would
be good a change in the economic model in which the real estate may not recover a central place, boosting RDI and industry, and consider measures to increase public control over land and housing markets, such as:

          • Create a public housing park until reaching 15% of Spanish housing stock. This would transform the land market, allowing price stabilityand becoming a first order counter-cyclical measure.

• Enhance local public housing enterprises, instead of making them disappear as the Ministry of Public Administration pretends by the
upcoming reform of local authorities.

Along with this, there should be somewhat in line with CNC proposals to simplify legislation and urban techniques, increase transparency of planning decisions and base them upon the principles of necessity and proportionality, and drive public land management by leaseholds.

The best way to correct market failures is not flowing towards liberal positions that have already failed in Spain, generating of urban expectations in rural land and a general price increase. It must be incorporated to the reflection to increase the Government intervention in the land market, becoming a major player in the change of model housing tenure, from property to rent. This way does not undermine competition because public housing is an area alien to it, and in fact Local and Regional Governments across Europe are key players in the rental housing provision.
The point is that the Spanish authorities have not only allowed but also encouraged the commodification of housing rights. By giving up having a structural weight public housing park they have ignored, for over forty years, the main measure to curb speculation. In words spoken in Spain by Raquel Rolnik, UN Special Rapporteur on adequate housing “the commodification of housing has failed and the crisis is a golden opportunity to rethink the management of housing policies”1.

Without a powerful presence of public housing, what CNC proposes will lead us precisely to commodify housing more and more.

 

Quote : 1 (El Mundo, March 6, 2012).

 

 

Rafael Montero Gosálbez
Lawyer. Urbanist. MBA

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