Wednesday, December 7, 2022

Spain to lease public land royalty-free for social housing building

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Spain will lease public land to private companies and waive royalty fees on the condition of a commitment to build and manage social housing during the lease, Transport Minister Jose Luis Abalos said on Tuesday.

“The state will offer public land up for concessions of up to 75 years, and private companies can opt to build and rent social housing,” said Abalos, who also has responsibility for urban planning.

“This would allow the usual royalty fees to reach zero.”

Spain has been looking for ways to resolve its housing crisis in the face of a steep recession due to the coronavirus and an already low supply of affordable public housing – just 2.5% according to official estimates, against a European average of more than 5%.

The government had initially considered leases of 30 to 50 years under the new programme, but discussions with real estate firms led it to increase the maximum lease duration to 75 years.

“We need to build between 1 million and 1.5 million council homes,” a source at the transport and urban planning ministry told Reuters. “To build such housing, you need private initiative. We want to incentivise private promoters to enter a sector which currently doesn’t exist in Spain.”

The royalty fees for each public-private concession will not be waived by default, but will depend on how much social housing is being built, and in which region.

Neither Abalos nor the ministry could specify how much public land would be leased under these conditions, and where in Spain.

The hope, however, is that such concessions will trigger further public-private collaborations, the ministry source added, such as reconditioning urban areas to make them more environmentally sustainable.

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