Spain’s handling of property crisis

In an extraordinary gesture of generosity, the ruling Spanish prime minister, Jose Luis Rodriguez Zapatero, has announced cash handouts of ?210 (£150) a month to help young Spaniards move out of home. This announcement nearly sent me packing my bags back to Spain until I read the footnotes (one of which states that you have to be in your twenties to qualify).

In 1998 (and in the blessed days of pesetas), I paid about 26,000pts a month for a dingy room in a Madrid flat with paper thin walls, a couple of seriously deaf news bulletin addicts upstairs, no central heating and all in a barrio that most taxi drivers hadn’t even heard of. It was not glamorous. But it equates to £104 or EUR145 a month. If the government grants had existed then, I would have lived rent free, with a change for litre of Calimucho (a curdling cocktail of red wine and coke ? a favourite among university students).

However, reading on in the piece, I learn that rents in Spain’s major cities have changed somewhat since my student days. Average rents in Spain are only ?720 a month, but in Madrid, Barcelona and San Sebastián landlords can charge almost double. In the capital the average rent is ?1,138 (£808). It doesn’t specify whether this is per room or per flat (I assume the latter) but still that’s a considerable leap (our 3 bed flat cost £312/month).

The article continues: ‘The move comes after a ten-year housing boom that has sent property prices rocketing by 150 per cent and left thousands of young Spaniards unable to afford soaring rents. Many are living with their parents until well into their thirties.’

But Spanish children have historically outstayed their welcome in their parents’ house (in northern European eyes) for decades. One of my bosses during a stint of working in Barcelona, aged in his early 40s, was still living at his parents’ house when his girlfriend had had enough of him: he was an associate at a multinational accounting firm who had yet to buy his own home.

Pundits suggest that the stimulus behind this bill is that a general election is looming next March. When the scheme starts in January, about 180,500 people will benefit from it at a cost to the Government of ?436 million. The Government also plans to allow renters whose annual incomes are less than ?24,000 to benefit from tax cuts as property buyers from January, a measure that will cost ?348 million in lower tax receipts.

Mr Zapatero called the plan the “emancipation of the youth” and claimed that eight out of ten young Spaniards earned less than ?22,000 and would benefit from the payouts. He added: “You know that for many Spaniards housing is one of their main problems. I think today we are taking a big step in the right direction.”

Meanwhile, the Government here can only find it in their hearts to offer paltry discounts (and long overdue) in council tax to servicemen in Iraq and Afghanistan. First time buyers are left to stomach the wildly incontrollable inflation in house prices, mortgage themselves at multiples of their salary unthinkable ten years ago, and stump up extra thousands of pounds in stamp duty with no relief whatsoever.

Anyone else like to move to Spain?

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