Juan Van-HalenDIRECTOR GENERAL HOUSING AND REHABILITATION

MADRID REGION

NEW IDEAS ON AFFORDABLE HOUSING

·· Ayudas a la rehabilitación de vivienda ··

The housing market in Spain and in the Community of Madrid(1)

The housing market: Some facts

SPAIN

Population: 47 millions of people

Housing stock: 25,1 millions

Primary residences: 16,7 millions

Rent: 2,2 millions

Rent: 13,19 %

Housing starts 2009: 159.286

Households created 2009: 357.200

Average price: 1.865,7 €/sqm

COMMUNITY OF MADRID

Population: 6,4 millions of people

Housing stock: 2,8 millones

Primary residences: 2,2 millions

Rent: 0,45 millions

Rent: 19,97 %

Housing starts 2009: 19.766

Households created 2009: 54.441

Average price: 2.591,2 €/sqm

Affordable Housing 2

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The housing market: Evolution

HOUSING STARTS1991 – 2009

3

0

100.000

200.000

300.000

400.000

500.000

600.000

700.000

800.000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Spain

Madrid

Affordable Housing

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The housing market: Public housing

PUBLIC HOUSING STARTS1991 – 2009

4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Affordable Housing

Madrid

Spain

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All Spanish citizens have the right to access adequate

housing. (Art. 47 Spanish Constitution)

Housing policy: Exclusive competence of the regions

(art. 149.1.3 Spanish Constitution)

Central Government must establish the basis for the

overall planning of economic activity and housing credit

Legal framework

5Affordable Housing

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Legal framework for housing policy (II)

REGULATED MARKET (affordable, protected market)

regulated, subsidized, limited prices and reserve of land

6Affordable Housing

FREE MARKET

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New approaches to housing policy

From “social housing” to “affordable housing”

Who should build public housing?

– Role of private initiative

- Public Private Partnership (PPP)

- Who should benefit from public housing? Income ranges

Subsidies vs. Limited Prices.

Reserve of Land

Qualitys Housing – Technical Building Code.

7Affordable Housing

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A necessary condition for effective housing policy

Regulation of land development

Land Law of Madrid Region – Law 9/2001

Reserve of land for affordable housing:

– 50% of new developments

Reserve of Land

8Affordable Housing

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BENEFITS FROM AFFORDABLE HOUSING POLICY

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House prices 55% below free market

Subsidies for promoters (for rental housing, 30% of total cost)

Subsidies for renters/purchasers

Credit facilities (special mortgages): EURIBOR + 1,25

Affordable Housing

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6. Fiscal policy

10

1960 2009

42%

20%

Rental housing

Tax benefit:15% cost of mortgage

END December 2010

Affordable Housing

·· Ayudas a la rehabilitación de vivienda ··

New ideas for housing policy

Starting conditions:

• 50% Land Reserve

• Participation of private sector

• No subsidies: AFFORDABLE PRICE

• For middle classes (broad income range – 90% households)

• Promotion of rent market

RENT WITH OPTION TO BUY

PUBLIC PRIVATE HOUSING PARTNERSHIP

11Affordable Housing

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Rent with option to buy

For young people (under 35 with incomes under 42.000 €/year) Rent for 5, 6 or 7 years + option to buy at prefixed price 50% of rents paid deducted from final price

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Example: housing in Madrid capital

Rent by month : 636 €5, 6 or 7 years

OPTION TO BUY

PRICE: 180.000 €(- Deducted 50% rents)

Affordable Housing

New initiatives

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New initiatives

PUBLIC PRIVATE HOUSING PARTNERSHIP

Land Law - transfer 20% new developments

Concession basis – 40 years

Linked to housing needs in terms of life cycle

Rents 30% below free rental market

Objective: 45.000 dwellings

Private investment: 4.300 million €

13Affordable Housing

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New types of protected housing

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SOCIAL HOUSING (IVIMA) PUBLICPROMOTION

PRIVATEPROMOTION

BASIC PRICES

LIMITED PRICES

Household incom

e

26.000 €

42.000 €

57.000 €

RENT

Affordable Housing

RENT

PURCHASE

RENT & CALL OPTION

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Conclusions

The Community of Madrid is a LEADER in promotion of protected housing in Spain

1 of each 4 “affordable” housing in Spain is built in Madrid 1 of each 2 housing built in Madrid is “affordable”

From 2003 -> 132.000 affordable housing

Increase of rental housing to 20%

15Affordable Housing