Housing, Regulation and Discrimination | Edward Anderson
Last week a law was put in place that, depending on your perspective, represents a unique victory for tenants or is a flagrant attack on the freedom to charge whatever price you want. The law in question passed in the Catalan Parliament thanks to the support of Junts, who previously had been economically liberal throughout most of their existence.
Briefly, as this helpful summariser from elnacional.cat shows, it now requires that landlords cannot raise the rent by more than the cost of the limit set by the index in areas where the rent exceeds 30% of household income. Plus, if the current contract exceeds the figure declared by the index, it will legally have to be lowered at the next renewal.
Before we get into the rights and wrongs, a massive hat off must go to the Catalonia based Sindicat de Llogateres (Tenants Union in Catalan) on showing what old school self-organisation can achieve when it turns the sights on the economics. Finally, we’ve got a campaign that isn’t sectioning off people into their different identity politics groups but is focussed, like all good left-wing politics, on the money.
You could argue this is bolting the stable door after the horse has bolted but with astronomical rises in rental prices and the medium-term collapse of tourists, you could just as well argue this is the perfect time to strike. My concern is that these are paper laws and people could feel that the job is done. Enforcement is only done on the ground by people who rent themselves or join so I’d encourage all of you, wherever you rent (if you do so), to join a Tenant’s Union and do the hard graft of making sure laws aren’t paper tigers.
Also, there is an interesting political development. Junts seemed to have realised that having traditionally been the party of Catalan autonomy, the elimination of a settled middle class (currently being replaced by a generation with worthless degrees and no secure home) will make them obsolete in the face of the more radical ERC. The upcoming elections may have only heightened this awareness.
Now there are of course more serious criticism that could be made, such as the fact that economists supposedly on all sides of the spectrum (I say supposedly as the use of ‘both sides’ tends to mean two strains of liberalism, not a genuine difference) point out they don’t work. Whether it was Milton Friedman on the right stating that “Rent control is a law that supposedly is passed to help the people who are in housing. And it does help those who are in current housing. But the effect of rent control is to create scarcity, and to make it difficult for other people to get housing” or Paul Krugman who previously wrote that it would decrease the supply of building of rental flats and “those landlords who do rent out their properties might not bother to maintain them, because when supply and turnover in the market are limited by rent caps, landlords have little incentive to compete to attract tenants.”
For anyone who has dealt with 99% of landlords, Krugman’s remarks about landlords not improving housing can be snorted at with derision. When have landlords done this anyway? Comparing housing to any other product you can quickly change away from to a different supplier is an impossibility and landlords know it. Also, his point about competing for tenants or leading to a restriction on supply can go in the bin when you look at the facts. Based on UN data, the metropolitan area of Barcelona has grown from a population of 1.8 million in the 1950’s to a population of 5.8 million today, which includes the most densely populated region in Europe (my former place of residence in L’Hospitalet de Llobregat). Land is a zero-sum game and there is no more left in Barcelona. We can’t increase supply, only lower demand.
Friedman did get one thing right though; the policy is about making it harder for other people to get housing. As conservatives and left wingers, we should be unequivocal that is exactly what we are trying to do. Plus, Airbnb did not exist then and when owners could discriminate against locals in favour of tourists (in those heady pre-covid days), they did so with abandon. Reality means that there will always be discrimination.
A left winger and/or a conservative needs to accept that we are in the game of discrimination and the first rule of the game is to be bloody honest about it. Don’t kid yourselves, when a liberal says they want everyone treated the same they are still discriminating… by money. That’s why they are so remarkably blasé about the fact that rent has exploded in places across Spain because in the end their argument boils down to: Well, if you can’t afford to live there, you should move. I don’t see how telling people who were born and where their families are based that they should eff off so thousands of tourists can get some quality insta’s is any less cold blooded then, say, telling tourists to find another holiday destination.
Conservatives and lefties should feel no shame in saying that yes, we are making it difficult, because we want to discriminate in favour of policies and institutions that make stable family homes, where people on average to low incomes can settle down and have kids. Which means discriminating against those policies and institutions that are in the way. It’s why this kind of move shouldn’t be the end but the start of turning the tide. That means there will be losers, namely tourists who want to come to Barcelona and the landlords who’ve rented out flats. It’s a sign of just how far down the progressive rathole we have fallen that saying housing allocation should be discriminated in favour of people who are residents and banned from tourist use is seen as extreme.
I would have thought that Spanish conservatives, who you would hope would look at the decimated native Spanish birth-rate, might also be worried about that. The vote of PP in the Catalan Parliament would suggest, sadly, not.
“The facts by themselves really have no policy implications. The question is: Who are you rooting for?” This was George Borjas on immigration but for immigration, see housing or indeed any real question where there are winners and losers. Do you care about the tenants and long-term residents (or increasingly former Barcelona residents) who have seen themselves unable to create stability, neighbourhoods and families in their region’s own capital? Or do you care about financial speculators who are desperate to continue the policy that has exploded rents, turned thousands of homes into tourist flats and collapsed the native Catalan/Spanish birthrate to ungodly levels? For those of us who are conservatives at heart, we might allow ourselves raise a small cheer that this time when Canute held up his hand, the tide receded.
Photo used by kind permission of the Sindicat de Llogateres.