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Analysis | Lessons of the rent, what‘manca finezza’?

The maestro Luis Garicano gave us once more a lesson in first of economy [article published in Business on the 21st of October entitled, The rent and the housin

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Analysis | Lessons of the rent, what‘manca finezza’?

The maestro Luis Garicano gave us once more a lesson in first of economy [article published in Business on the 21st of October entitled, The rent and the housing, do you have to regulate it?]. He spoke of one of the themes of today: the rent. It's not even clear that he considers it a problem. Of course I responded with the recipe: more market, nor are we happen to think of regulating anything, it is always counter-productive, accusing those who propose something in the opposite of ignorant. It is always so.

To argue here, also, in favor of deregulation dates back to franco's legislation, which the brave minister Miguel Boyer dared to repeal. Creates the manichaean, usual chicanery. No one at this time speech again of the automatic renewal of the rental contracts that governed it then. It's been decades and things have changed a lot.

Yes, we are in a country whose residents, mostly, live in a home of your property. We exceed 90%. The car has maintained its status of the scheme structural of a significant proportion of the population until the fifties, that has been maintained in many other european countries. This, however, has been there is possible by a number of other measures, complementary to the market, that should not be ignored. In other countries, has maintained an aggregate supply of public housing or subsidised rental, with prices content contrabalanzan the market. Surely essential, it is difficult to achieve, and to a lesser extent, improvising.

The rental return here to collect a greater weight. Becomes, today, in the focus of the debate. To cope with this new problem, mr. Garicano, just comes up with the solution of always and generic: build more? Do you think that the rise of prices is motivated by the failure of construction licenses that give the city Councils? It is a bit simple, isn't it? You himself gives us a clue: the problem, he says, arises (only) in large cities. You could say that anything less than that, but it can be a start. It means recognizing that in this complex issue, that of the housing, there is to ask, not only how much, but “where”. In the housing market involves a special variable that is the location. Puñetera where the hague is resistant to the modelling of both like econometras. Well that has tried to the Bank of Spain, with its sophisticated polynomial functions, without useful results.

In the case of housing, the big questions are where and for whom. In any approach simplistic, supposedly economic, both are eliminated. Will be on the market to resolve, which will place every one, and never better said, in “your site”. Or perhaps exclude them, in effect collateral. Who was until now in rent? Some, the least, by conviction, having been able to purchase a home. Others, the majority, by necessity, before the impossibility of buying it. Among the first are some pioneers in reclaiming the attractiveness of the central areas of degraded, even with its problems. When the majority departed from these, they stayed there decades ago. Many others have had to add recently to rent, excluded from the market purchase with low and precarious wages. Resist however to go to the Bets10 extreme periphery, with increased transportation costs. Come together to share, generate a new demand. They are new phenomena.

What is going on since today in our great cities? It seems that the rent is skyrocketing. Many factors converge. Don't even know for certain, from a reference low rigor statistically, but giving rise to high-sounding headlines. The problem arises, interestingly, the result that our cities, and especially its central areas, once degraded and that the middle classes, and not to mention the rich, tended to flee, have become the object of desire. And this is so both for residents as well as tourists, that they can find in homes of a accommodation cheaper than hotels and can be up to assess as more “authentic”.

There is more demand than an offer that, in a consolidated city, is by definition bounded. Your potential increase will be reduced, even if the relevant municipality, with imagination and daring, invent systems, always complex, to get it. Can hardly do so the market alone. It is a phenomenon that affects not just our big cities, but is still widespread in western countries and even in USA. As a phenomenon that was not specific of Spain, our metropolitan areas were formed by the removal to other municipalities of new households generated in the central city. Some, with resources, out of her own volition, to environments more attractive, the majority did so by exclusion of the real estate market: they could not pay for housing in the central city. In the years eighty, the sum of the two phenomena, 90% of households generated in Madrid went out of the city. They were resigned to leaving.

the attraction for The city has increased and the resignation has been questioned. Grows the pressure on the city, perhaps exponentially. To do this, from the point of view of housing policy, what do we do? Without going into the specifics of this market and beyond its generic elegy on the market, Garicano part of two premises and asks for four lines of action. Of the premises, the first single is the fruit of the manichaean that he himself creates: do not continue to insist on the automatic extension, something that nobody does. Second, “any solution should have an impact on the supply of housing”. You might agree, but in the first place considering, where, what type of offer and by what solutions.

And now we go with the proposals.

1. The solution does not pass by houses of official protection. This mechanism of protection may be outdated. There is that to modernize it, according. Hence deduce that there is that the deletion of any regulation is pure ideology.

2. You have to promote a law against squatting illegal. It can be, if you evaluate their relative incidence. In addition to the allocation, which is done by principle, the squat will be denoted on all demand (or need, that old concept), and unsatisfied. In addition to outlaw would have to give an answer.

3. There is that “mobilizing the houses uninhabited”. In this there would be broad consensus. Not so with the formula. Exempt PROPERTY is something difficult. It seems a means to use against results and not only by the professionalism of the lessee. The funds may be others, but the up to now known, the “vultures” - do not generate precisely trust.

4. More than a measure, it seems like a justification. The story tour have no impact on the increase of rents. Go pretentious and risky statement, next to the CNMC, which has encouraged and he insisted on the bubble. To say that in California, a market ripe for Airbnb, it may not be an argument to our great cities in which emerges the phenomenon.

The solution is not quantitative. Or it is in general, or in the case of the rentals. It seems that, thinking and innovating, we should consider: Who has the right to continue living in the city? Do only those who can pay the rents that the market is imposing on them? The expulsion, as we have pointed out, is no novelty, but isn't it more that accept it, resigned, or enthusiastically? What even of those who being years residing on rent in the centre, and that both have indeed contributed to its improvement, now look at them surprised by a sudden rise occurring? I already I went ahead to propose the right place to be accorded to tenants-resistant. It seems that there would be that to enter with more finezza to give a solution “policy”, and not just the result of applying the pure simplicity of economic problem. And this, if this is considered as such, which of its manifestations it is hesitation. I hope you have a chance to keep debating it.

Eduardo Leira is an architect, MCRP.

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