Spain plans to turn foreclosed assets into 50,000 public housing units

OVIEDO, Spain

The Spanish government on Tuesday approved a plan to acquire foreclosed homes and land from an officially backed bank and transform them into 50,000 public housing units with affordable rent.

Economy Minister Nadia Calvino stated that the plan aims to "guarantee more accessible housing for young people" and moderate increases in monthly rent payments.

The plan involves acquiring 21,000 vacant homes from Sareb bank and transferring them to regional governments as public housing. Additionally, 14,000 occupied homes will receive social rent programs, and the government will construct 15,000 homes on land owned by Sareb.

Sareb, a government-backed "bad bank," was established in 2012 in response to the financial crisis. Its primary objective was to absorb and manage toxic assets from bailed-out Spanish banks, which struggled with non-performing loans and properties acquired during the country's property market bubble.

Initially, Sareb took on a portfolio valued at approximately €50 million ($54 million), but has managed to sell off around half of the assets in just over a decade, according to its website.

Although originally government-backed, Spain's progressive administration gained majority control of the institution in 2022.

With only 3% of public housing, Spain has one of the lowest levels in the EU. However, the government aims for the state to own 20% of the country's housing stock within 20 years, putting Spain on par with countries like Austria and Denmark and surpassing the EU average of 9%.

In Spain, the average young person doesn't move out of their parents' home until nearly age 30, according to Eurostat. Experts say this has to do with high costs of housing compared to wages and job availability.

In 2022, the Spanish government capped rent increases in the private market at 2% to prevent inflation from escalating further. This has been extended to 2023.