Youth and housing: practical guide to know all public aid

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The Ministry of Housing presented the new price index on Tuesday to control the ruthless increase in rent. This seeks to limit the speculation that has been established in this market for years and that, although it affects all segments of the population, is harsh on young people. It will come into force on the 13th and immediately afterward it will begin to operate in 140 municipalities in Catalonia. It will be the first autonomous community that will apply the state price index, “quite lower than the rents that appear on real estate portals,” according to David Lucas, Secretary of State for Housing and Urban Agenda. In some cases this difference reaches up to 100%. Housing has become a black hole for young Spaniards, who, in the vast majority of cases, allocate much more than 30% of their salary—the healthy threshold—to housing. payment of rent or mortgage. Hopefully, because only 16.3% of young people have managed to emancipate themselves (and not before the age of 30). They are the biggest victims of housing in Spain. Although the labor reform and the increase in the minimum wage have somewhat improved their situation, “the vast majority of young people are poor workers with an uncertain job future, and this clearly excludes them from the mortgage market to be able to buy a home and makes it difficult for them to access the rent,” says José Ignacio Conde-Ruiz, professor of Fundamentals of Economic Analysis at the Complutense University of Madrid and deputy director of the Foundation for Applied Economics Studies (Fedea). “Today's young people have a harder time developing personally and professionally than when my generation was young,” he adds, an idea that he includes in the book Youth Attracted and that he attributes to the reduction of public spending dedicated to young people in favor of old. “In the 1990s, young people represented 35% of the electorate and today they barely reach 20%.” In Spain, which has not had a housing law until 2023, the bomb has exploded in its hands. It's time to fix the damage. The Government has deployed a battery of measures aimed at facilitating access to a home at affordable prices. Among them, three specific initiatives for young people stand out—separately, there are the communities' own plans, which have jurisdiction in this matter. It is a first step, although experts recognize that much remains to be done. One measure is the young rental bonus, approved in 2022. This is direct aid of 250 euros per month for young people up to 35 years old with annual income less than three times the IPREM. For the Spanish Youth Council (CJE), the measure “has not been and is not effective, it is a patch,” complains Juan Antonio Báez, vice president. He explains: “The Government's initial forecast was that it would reach around 65,000 young people of the seven million who live in Spain, that is, 0.9%. Furthermore, a prerequisite to qualify for aid was to be previously emancipated, so more than 80% of the young population is not even potentially a beneficiary of aid.” Furthermore, the bonus is being applied in a partisan manner, which means that in some of the communities governed by the PP this state aid is not being processed. Although the Minister of Housing and Urban Agenda, Isabel Rodríguez, stated last year that the bonus had already reached 66,000 young people, the truth is that hundreds of them are still waiting for the 250 euros per month and have joined platforms for those affected in Andalusia. , Murcia and Madrid. “Either the files have not been resolved or the aid has not been received,” emphasizes Báez. Housing has announced that it will expand the funds and that it will analyze why the aid is not being applied in the same way in all regions.David Gil, sociologist, professor at the University of Valencia, member of the Youth Chair and specialist in youth emancipation , believes that it can be “a help for those young people who already had in mind to take the step”, but “no one is going to make the decision to leave home because the youth bonus exists; Since it is not universal (you don't know if they are going to give it to you) it cannot encourage that decision.” Furthermore, he adds, “by subsidizing demand, it can generate price inflation.” The bonus does not convince the director of the UNESCO Housing Chair, Sergio Nasarre, either, considering that «there is a lack of structural solutions for access to housing that make it easier for people not to have to resort to being subsidized.» Aid to buy a house is the second initiative underway. On February 13, the Council of Ministers gave the green light to the line of 2.5 billion euros of public mortgage guarantees so that young people under 35 years of age and families with dependent minors can access their first home. This measure, which could benefit 50,000 people, covers 20% of the entry fee, the great obstacle for many young people who do not have the slightest savings capacity. However, it once again leaves out millions of young people who, even with the guarantee, they may consider requesting a mortgage due to their salaries and job instability. “The mortgage will be for 100%. The consequence is that many young people will have to allocate a greater part of their income to pay the bill monthly,” says Ignasi Martí, director of the Esade Institute of Social Innovation.

Out of the big city

The third aid is 10,800 euros for those under 35 years of age so that they can buy a house in municipalities with less than 10,000 inhabitants, a measure included in the State Plan for Access to Housing 2022-2025. The subsidy has a limit of 20% of the cost of acquiring the home, the maximum price of which cannot exceed 120,000 euros. Nasarre believes: “A structural policy of territorial cohesion is needed that ensures that our young people do not necessarily have to live in Barcelona or Madrid or in some other large city such as Palma de Mallorca, Valencia or Zaragoza, emptying the rest of the territory.” The problem, says Conde-Ruiz, is that economic growth is concentrated in the cities and «all the employment is there, in Madrid, Barcelona or Malaga.» The Ministry of Housing reminds us that, although they are not exclusive to young people, the collective can also benefit from other measures. One of the most ambitious is to enable more than 184,000 new homes for social rent or at affordable prices. According to the experts, only in this way—by increasing supply—can the entrenched and chronic housing problem in Spain be resolved. But building those houses will take many years, so many that the young people will have stopped being young. It doesn't matter. “For those who come behind, structural housing policies are necessary,” says the vice president of the CJE. So that what is happening with this generation is not repeated, “the one with the worst economic prospects in the last 60 years. In the last decade, politics, and not just housing, has forgotten about young people,” Báez complains. Growing supply is a sine qua non. “Without a stock of affordable and social housing for young people and a sustained and coherent public policy over time, which positions housing as a social good, the different political initiatives will not reach everyone and will not solve the underlying problem,” he indicates. Ignasi Martí. Furthermore, “it has the effect of containing prices in the private market, since since there is a public alternative, the owners cannot ask for an exorbitant price,” adds Gil. Follow all the information from Economy and Business on Facebook and xor in our weekly newsletter

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