Saturday, November 27

Social. New type of publicly regulated housing

We could speak of “publicly regulated housing” by including directly public housing, as well as those that are the product of public-private collaboration, essential to achieve a significant number of affordable rental housing stock. Qualifying, within that regulation, I would propose to establish two modalities: social and affordable, as I pointed out in my first article. The distinction between the two would be based on both their objectives and their recipients. They would also require different conditions.

Affordable housing, with an agreed rental price, they would try to influence the market, tending to mitigate the continuous rise in rents. They would have no restriction on their recipients. We will dedicate another chapter of this saga to them.

The social ones would be those that had their recipients restricted, based on their income, normally measured in the number of IPREM (Public Indicator of Multiple Effects Income). They refer us to the already minted Official Protection Housing (VPO) used for decades. They would constitute a renewed version of this outdated protection regime, today reduced to bureaucracy. Fulfilling the conditions that were established, the rental price and the necessary investment in each case would be agreed (allowing to adjust them to the place) between the private developer and the administration, through a new protocol, simpler and faster than that of the VPO qualification. .

The scandal that seems to generate every announcement of regulation today is surprising, when throughout the process of formation of our cities and metropolis, that regulation has existed and has been accepted, splitting the new offer between free and “protected”. For decades, the latter was the majority and only in the last, when we were told that there was no longer a housing problem, did it go to something marginal. Everything was becoming “free”, that clamor that today resounds in political slogans, advertisements and even in some perfume name.

Direct public investment, even important in the beginning (today it would have to be said in “prehistory”), was drastically reduced until it disappeared in fact. The breakdown, between free and protected, began to be established before the private promotion of new housing for sale. The public support, and therefore the counterparts, especially in terms of financing, and even in taxation, allowed the private developer to undertake protected housing, whose sale prices were limited and were aimed at recipients with equally limited income. This, however, is basically past history. The “Official Protection” has been reducing its validity periods (with the attraction of going free soon) and its modules have been outdated. It has ended up being reduced to some precious demands for the characteristics of the house and the stormy bureaucratic process of its qualification. The requirements have been exceeded by the Building Code and the demands for energy saving. Only the bureaucracy remains. VPOs today offer nothing to private home developers. There are no trade-offs, just hassles and limitations. Except for exceptions, forced by circumstances (which some should be discussed), private promotion does not have the slightest incentive, today, to undertake VPO.

The system was designed for access to property. After having the incentives and counterparts, the promoter secured the subsequent help of the bank, which was equally committed to the system, granted the mortgage to the recipient of recognized reduced resources, in which the aliquot part of his legally favored promoter loan was subrogated. . This charged and went out. The bank would take care of it after collecting the mortgage.

The regulation of the VPO also contemplates the rent. Not by chance, VPOs have hardly been built for rent. There is also a legal limitation, regarding the modules of maximum sale value, in euros per m2, the rental price can only reach 5.5%. It would not be a bad return, considered in the abstract, with respect to the investment. However, handicaps do arise. Not only the absence of initial compensation (in view of the limitation of the rent of the tenants and the rent) but also the risks of direct collection and maintenance (or through specialists who will charge for it) over the great number of years necessary to amortize the investment. Almost no one undertakes that type of investment / promotion.

A large public park of social housing: the most longed for today by all

That this park is not available is recognized and, curiously, claimed today by everyone, even by those who, directly or elusively, until recently did not consider it necessary. The BdeE is perhaps the paradigm of the convert for these purposes. Recognizing the deficiency, it would be necessary to consider how it can be achieved. In principle, although the allusion to Official Protection often appears by inertia, it does not seem that it can be built from the periclited regulation of this.

Well, let us first of all verify the different bets (or perhaps only illusions) for this great park, with convenient security, but which has been proposed as necessary, from different positions, despite the evident impossibility of being achieved in the short term, something that hardly is recognized.

The generation of that park has constituted in the first place the “guide” or the objective of the ministry of the branch, the MITMA. There has been talk of a “public” park, even leaving the potential public-private collaboration in mute, implicitly transmitting that public institutions were capable, with their effort, their management capacity and their investment, to generate it. We will return to this when we consider the unfulfilled promises.

Paradigm of illusion may be the first action of the compendium of measures that, unanimously by all political groups, the Madrid City Council adopted in 2020, to get out of the pandemic crisis, longing for the situation in Vienna, not by chance , has spent 100 years insisting on ensuring the majority presence of social housing in his city.

Well, beyond the illusions, the “need” of the social housing stock is something common today in the statements of experts, representatives of employers and managers of companies in the real estate sector. It is something necessary, they say without saying so, that it complements our performance in the market and that they channel the demand (need?) Of those who, logically, the exclusionary market cannot meet. If it existed, that public park would take a load off them. They are not our thing, they seem to say, and sometimes they make it explicit.

Beyond illusions and justifications, it seems that trying to build a social rental housing stock should be an objective, recognized as such in the new law and in which, coherently, the bases and procedures are established to achieve it, recognizing that, although it may seem paradoxical, it constitutes a new objective. Also assuming, logically, that it is a medium-long term objective.

Strengths and requirements to generate a publicly regulated social housing stock

No matter how much direct public investment from the different levels of the Administration increases, it will never be enough to generate this park with a significant number of homes. It will never foreseeably increase that investment sufficiently, not even including what is channeled to the rehabilitation of an existing building. We will have to resort, without any disappointment, to public-private collaboration. For this, the conditions that allow and encourage it will have to be established, since, from the outset, private investment could not profitably undertake the promotion of social housing for low-income recipients.

The first condition would be to provide land (in principle public) whose use (surface rights) is transferred very cheaply, or even free, for a long period of time, which allows the investment to be amortized. In addition, today, it would be necessary to secure the financing to build, if it is intended that medium and small promoters enter this (exciting) bet, those entering the local circuits. We will have to open the field to developers, real estate connoisseurs, and not only depend on funds. Financing for developers should be previously agreed with the banks and supported, where appropriate (if it is essential), by an ICO guarantee.

The promoters will be able to place the development, either in terms of “build to rent”, so that a third party exploits it for rent during the years of the concession of the land, or becoming, in addition to promoter, and given the new conditions, a manager , revenue collector and maintainer of the promotion in that long period.

However, these conditions will not foreseeably be sufficient to attract private initiative. Especially, if the possible recipients of the homes are restricted to those who only have 3 times the IPREM (as has been done in RDL__ of 2020) It will then be required to accompany the land concession with a direct public subsidy that allows, at least , that the construction can be carried out profitably and, furthermore, that once completed it can be sold to a manager who can exploit it, likewise, with a minimum profitability, taking into account the obligatory limitation of the rents that can be charged. This subsidy would only supplement or complement public investment capacity, which will undoubtedly be much less. Ultimately, the homes thus built will become public at the end of the land concession period and will be permanently rented. They could not be sold.

Within this, which can only be a statement of conditions, two other questions will have to be considered and resolved. The first, that within this “park” the VIS (Social Integration Housing) and other housing alternatives would have to be integrated in the event of emergencies, perhaps more precarious, that municipalities have to count on. The second, more delicate, consists of establishing, in a forceful and procedurally clear way, that the rents of social housing, even though they are low, must be rigorously collected and therefore paid. With consequences if they are not paid. The experience of defaults in public housing makes it necessary to consider this issue very seriously in the new regulation. Evictions cannot be ignored, nor unfortunately excluded from the collection provisions. There will be unjustified failures that will have to be solved, since no one can be left on the street today, but they will have to be emergency solutions.

It is clear that all this is not easy, nor will it come out alone. Now, if it is intended to have a social housing stock, these are the measures that will have to be adopted in the first place from its regulation in the new law and its regulatory development, as well as in the budgets.

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