Liberal Housing Policies
Raising rents, skyrocketing buying costs and a tight housing market are challenges many major cities across Europe and the Mediterranean are facing. People pay large parts of their salaries for living. Access to housing is particularly complicated for vulnerable groups like families or young people with low income, who are facing more financial difficulties due to job instability and unemployment. While the shortage of housing is a major problem in many big cities, oversupply in some rural areas is the other side of the coin. Some regions e.g. in Eastern Germany or Extremadura in Spain, which has been nicknamed “España vacia” (“empty Spain”), suffer from the contrary development.
Accelerated by the Covid-19 pandemic, the digital transformation has entered all areas of life. Smart city is key when talking about urban development nowadays and digitization is changing our world, our societal behavior and our ways of living. Schoolchildren already learn and employees work remotely - and yet, we are only just at the beginning of a new age that many call "the fourth industrial Revolution". At the same time as a consequence of the confinements, people are also giving more importance to housing. One concrete example of digital transformation changing structures and shaping our cities are manifested in the centers of many small cities, where shop owners fight for survival in times of online trade.
Best - and worst - practices to solve the housing problem can be found all over the world. Housing is one of the most interventionist policy areas. Populist approaches like the infamous Berlin rental cap - a surreal housing price control – is one example. The so-called 'Mietpreisbremse', was intended as a rent price regulation tool to secure affordable rents. Thus, it actually lead to the opposite effect and resulted in less supply and access to housing, increased legal uncertainty and less investment instead – and in the end, thankfully, was deemed unconstitutional. Price intervention is not advisable because it is creating a different market with distortions that are not able to control. What it generates is a reduction in supply, because the private market withdraws supply while what is really needed is an increase in supply. An alternative to achieve effective regulation of rental prices is a commitment to create more social housing, but which cannot be done from one day to the next.
So how to make housing sustainable and affordable? We are called upon to develop future-proof, market-based solutions to reduce bureaucracy and overregulation to improve access to the housing for everyone. When it comes to implementing new ideas, a favorable environment is a basic precondition, created through an interplay between different stakeholders decision-makers, city governments, urban planners, civil society and the real estate industry is needed. On the larger scale a support system for innovative solutions is needed to support and develop community initiative practices to meet the demands of decent housing on a big scale leading to fairer and more solidary cities.
Liberals are called upon to develop real policy solutions and to re-think does not necessarily require to re-invent the wheel. This is where a new FNF liberal housing policy project comes in, bringing together liberal political decision-makers, city governments, urban planners and representatives of civil society and the real estate industry. With the goal of developing concrete policy proposals from best practice examples, the project roadmap foresees delegation trips to Spain, Germany and Italy to identify concrete flagship projects. First stop on the project roadmap of the new liberal housing policies expert group was a study trip to the model city of Alicante. Considered the “Silicon Valley of the South”, the city rates high in economic freedom. The group met with the city administration, liberal politicians and representatives from the private sector, paying particular attention to the key role of prices and regulations. Antonio Peral, Councilor for Project Coordination, Modernization and New Technologies welcomed the group to Alicante and gave an overview of the city`s digital and urban development. Rufino Selva Guerrero gave a tour across the Digital District in the City of Light complex, the ground-breaking tech’ hub hosting international tech’ and audiovisual companies. The group learned about how new types of residential or commercial use can contribute to improve existing buildings. Pablo Sanchez Chillon, Lawyer and Coordinador of “Alicante Futura” and José F. Trigueros Sellés, Director General of the ESATUR Group and expert in public policies discussed how to make a city future-proof and how public policies should respond to the deficit of access to housing. Innovation and entrepreneurial ecosystems in Alicante were the topics of the meeting at Torre Juana, the private technology hub. Speakers were Andrés Pedreño, founder & entrepreneur, Yolanda Parrado, 1.70 km Hub and Celia Sánchez, CEO of 1MillionBot, an Artificial Intelligence company founded by Andrés Pedreño and part of 1.70 km Hub. A liberal perspective on housing in gave Juan Ignacio Lopez-Bas, Member of the regional parliament for Ciudadanos and Adrián Santos Pérez Navarro, Counselor for Urbanism.
How to incentivise, not penalize landlords in future housing laws and initiatives and how can we promote policy solutions without negative backlashes – these will be the research questions tackled during the next fact-finding mission to Hamburg. In the Northern German port city the expert group will exchange with public administrative bodies, which grant the licenses to build or rebuilt houses and with stakeholders at political level that pass those regulations. It is also planned to talk to private developers and architects about their concrete concerns and problems they encounter.
A summary publication will compile the results at the end of the whole project to showcase liberal policy solutions by best practice examples from across Europe, providing a new perspective from the local, regional, national and European level on the burning social issue of housing.