By Javier Burón Cuadrado, Housing Manager, Barcelona City Council, Eduardo González de Molina, Policy Advisor, Barcelona City Council & Research Fellow, UCL-IIPP and Eduard Cabré Romans, International Housing Policy Consultant, Barcelona City Council The housing problem is complex, systemic, interconnected and urgent. It is a clear case of a wicked problem where no silver bullet is available. Any policy which begins from the premise that the housing crisis can be solved with a single measure is doomed to failure. Equally mistaken are those who reduce the housing crisis to a simple imbalance between supply and demand (an interpretation that leads to a supposed solution of increasing supply) and those who reject the need for more housing, holding that the only measure required is to regulate the market to curb speculation and protect tenants.
Spain is in need not only of homes to rent but, specifically, affordable rental housing. That is to say, the country needs housing for those with insufficient income to meet market prices. As affirmed in a recent publication by the Spanish Central Bank the system is increasingly inaccessible, and the proportion of income dedicated to rent continues to grow. This is an obvious weak point in the market: supply has failed to sufficiently match growing demand. As Housing Europe shows (2023), with only 2.5% of social housing compared to an EU average of 9.3%, Spain still has a long way to go.
Without an extensive stock of affordable housing, it is impossible for the non-profit sector (public, public-private or third sector) to be a systemic actor in the market, with the capacity to dampen price hikes fluctuations and provide enough affordable homes to guarantee the right to housing. It is the duty of all the relevant actors in the housing system to resolve this historic deficit. However, what mechanisms are needed to develop affordable housing at a sufficient scale and pace to serve the unmet demand?
Not only is the housing crisis especially thorny but housing policy is also inherently complex, slow, expensive and controversial. For a policy to be successful, it needs a broad consensus, shared goals, a great deal of collaboration, a hybrid policy that employs all available tools, and all of that along with significant, long-term funding. Before anything else, however, it needs an orientation – a direction, a mission. As Mariana Mazzucato argues in her book Mission Economy, the market is a socially created institution, the product of the interactions between the public, private and third sectors. The public sector ought to give direction to the market, shaping it to ensure that it meets public goals. In the context of housing, the mission is to provide affordability which guarantees the universal right to housing. Since 2015, Barcelona has changed the paradigm of its housing policy. Inspired by the successful case of Vienna, developed over a century and in a context rather different, Barcelona is developing a new approach that seeks to provide stronger tenant protection while building affordable housing for all within the planetary boundaries. In this sense, Barcelona has implemented for 8 years (2015-2023) a housing policy where the 6 principles of The Right to Housing Mission have been implemented. Therefore, Barcelona is developing a market-shaping approach in the Right to Housing Plan 2016–2025. Alongside this new way of developing mission-oriented housing policies, Barcelona has outlined five sub-missions according to the principals suggested by Shane Phillips in The Affordable City of the ‘Three Ss‘: Supply, Stability, Subsidy, plus two more S: Social Dialogue and Sustainability added by Eduardo González de Molina.
Barcelona Right to Housing Mission Map (2015-2023)
SUPPLY
The city started by committing to a Housing Mission, which is ensuring access for all to decent, net-zero affordable housing. The first objective to achieve that mission is doubling the size of Barcelona’s social housing stock in 10 years. Shaping the market towards that mission meant to make the private sector responsible for providing affordable housing, by introducing inclusionary zoning regulations that means requiring 30% of homes to be affordable within the existing city fabric and 40% in new developments (half of which should be for rent). An important goal was to scale and speed up the council housing production by the Barcelona Housing Authority (IMHAB). However, the new role in providing council housing needed another type of public sector: an entrepreneurial state. Barcelona has invested in internal capabilities within the IMHAB and has strengthened the coordination between social services, urban planning and housing authority as a decentralised network of entrepreneurial public organisations. Moreover, the city has developed capacities for being a great purchaser in the market: public purchasing of existing private buildings. A new housing acquisition strategy has been implemented by enacting the right to first refusal in the whole area of Barcelona (ATiR). The city has invested €190m to acquire 1,600 housing units. A total of 50 existing buildings, correcting the geographical imbalances, and stopping speculative investments. As a step forward, the City is now launching a pilot project of a public-private fund to acquire, renovate and rent existing buildings, an excellent example of an urban wealth fund.
However, increasing the supply of permanently affordable housing at the scale and pace needed requires the direct provision by the public sector as well as in partnership with other actors. The City has created symbiotic public-private partnerships and a mutualistic ecosystem. One such collaboration is with social housing providers (ESAL Agreement) in a bottom-up and participatory process. The other type of collaboration is through a public-private corporation (HMB) with value-sharing mechanisms. First, the ESAL Agreement has as its objective to build and reform at least 1,000 affordable homes, using municipal land and buildings. The Agreement is based around two different mechanisms for providing affordable housing: social housing for rent and the right-of-use cooperative housing model. Barcelona has also recently witnessed the creation of Housing Metropolis Barcelona (HMB), a company operating with public and private capital in the Barcelona metropolitan area. HMB has as its aim to provide 4,500 units of affordable rental housing. Both the public partners (BCN and AMB) and the private (Neinor and Cevasa) contribute the same amount of capital – 50%. Risks and benefits are shared, as are decisions, which are taken by a Board of Directors made up of an equal number of representatives from each of the investors, along with an independent director chosen by mutual agreement. Another strategy of increasing the supply of affordable housing is by mobilizing empty homes. Empty housing units have been mobilized through the temporary public management of privately-owned housing in exchange for subsidies and incentives to the owners through various intermediation programmes, one publicly-run (Borsa) and another in partnership with a non-profit housing provider (Habitat 3), which was awarded the World Habitat Award in 2019. All these efforts would not have been possible without a long-term outcome-focused finance strategy consisting of public investment alongside the critical financial support of public investment banks through low-interest and long-term loans. This has provided a strong signal and a direction to the market, catalysing expectations about new cross-sectoral investment opportunities that crowd-in core and core plus investments to the housing market. A total effort of 1.5 billion euros of public investment has been mobilized during the last 8 years to fulfill the mission, a fair financing strategy that received the European Responsible Housing Award in 2019. STABILITY
A fundamental mission of any housing system is to protect tenants and give them stability. The uncertainty caused by uncontrolled price rises leads to rents causing economic hardship, forcing people to leave their homes. Facing displacement causes great stress and effects both mental and physical health, particularly when it is necessary to leave your local community and, with it, your social network. For that reason, the first aim of the City government was to create an anti-eviction unit that has stop 90% of the evictions in the city, receiving a World Habitat Award in 2023. Given that the private market encompasses 98% of all homes in Barcelona, security of tenancy necessarily involves compliance with various regulations, such as those related to urban planning, habitability standards and security of tenure. One of the measures through which Barcelona City Council has attempted to advocate for stability for tenants is through its proposal to create a rent control system. The corresponding regional law (Law 11/2020) served to halt the escalation of rental prices while, at the same time, boosting the supply of affordable housing. Evidence shows that the Catalan rent control system reduced rents by 6% without reducing housing supply. But it was declared by the Constitutional Court to be unconstitutional on grounds of jurisdiction. It was partially from this legal defeat that the Spanish housing law emerged. A Housing law, that, among other things[1], introduces provisions for national rent control, which Barcelona has pledged to adopt. With respect to the compliance with urban planning and habitability requirements, Barcelona City Council has also increased inspections and the sanctioning of illegal and abusive practices. The approval of the Special Tourist Accommodation Plan (PEUAT) made it possible to limit the further increase of tourist apartments in the most saturated areas of the city. At the same time, the practices of harassment carried out by corporate landlords and investors have been sanctioned, with the aim of reaching agreements to prevent tenants from losing their homes. SUBSIDY
For the public sector to provide new housing, or to develop the necessary institutional mechanisms to promote affordable housing on a large scale through partnerships with non-profit or limited-profit private entities, it requires both time and collective effort over decades. Until we have succeeded in developing a sufficient housing stock outside of the market to have a structural effect on prices, it will remain necessary to fall back on other mechanisms to facilitate access to the private market for those who, without support, lack the necessary resources to do so. Although rent control has demonstrated its capacity to halt price increases in the private market, it is nonetheless unable to provide housing that is affordable to households which receive support from social services and which, in many cases, have very low incomes. Until the public stock of affordable housing is able to meet such needs, it is necessary to provide financial support to bridge the gap between what households can pay and rental prices. Rental subsidies are used, therefore, to combat the housing emergency, preventing, among other things, evictions and severe rent overburden. Barcelona then has massively increased the amount of rental allowances, spending more than €246m between 2015-2021 and covering 29,814 households in 2022 compared to 18,208 households in 2014, a 63% increase. SOCIAL DIALOGUE
The mission of social dialogue aims to involve all the actors in the decision-making process. In addition to contributing to accelerating the development of new affordable housing, public, private, third sector and civil society should play an important role in the consolidation and professionalisation of the housing sector. Public participation in the design and implementation of housing policy is crucial to incorporate the contributions of both residents and the numerous organisations operating in the housing sector. The city has ensured a monitoring and accountability mechanism for this mission. Barcelona has created two participatory governance tools: CHSB, a participatory council gathering all social housing providers; and DECIDIM, an online citizen-led platform. Thanks to these tools, Barcelona was awarded as the first European Capital of Democracy. Moreover, data production is critical for good monitoring, so a Barcelona Metropolitan Housing Observatory has been created (O-HB) and a Barcelona Housing Chair partnered with public universities as a research and training body. SUSTAINABILITY
In the context of the climate crisis, the fact that 40% of CO2 emissions in cities are produced by residential buildings –which are also ageing and energy inefficient– means that the final pillar of a comprehensive housing and renovation policy should be the mission of sustainability. On the one hand, to renovate homes means to preserve the existing housing stock in an adequate and liveable condition. On the other, a commitment to sustainability means committing to energy efficiency and building homes using sustainable materials and construction methods. Renovation grants are a fundamental lever for the City Council to promote the sustainability transition. The City has committed to making them its central instrument for adequately maintaining the city’s private housing stock. Between 2015-2021, the City of Barcelona has spent €185m, renovating 74,000 housing units. In addition, the development of new industrialized housing using sustainable, low-carbon materials is an indispensable requisite that makes it possible to reconcile sustainability with affordability thanks to the increase in social housing development. Barcelona has also received several international awards for its sustainable, affordable and community-led architectural design, such as the New European Bauhaus Award or the EU Mies Van der Rohe Award.
[1] It prevents the privatisation of council housing, and sets a target of creating 20% of social housing over the next 20 years. It also increases protections for vulnerable tenants, and taxes landlords who hold on to empty homes. It includes new tax incentives for landlords who reduce prices or offer long-term lets.