Tourist Boom in Spain Fuels Widespread Housing Crisis

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Amid the tourist boom in Spain’s cities, a mounting housing crisis is pushing more people into homelessness. Francisco Carrillo, a 62-year-old pensioner, recently moved from Jaen in southern Spain to Madrid for throat cancer treatment, only to find himself unable to afford the steep rental prices in the capital. After three years of sleeping in the backroom of a theater, he finally found relief in a new apartment provided by a charity. “Tonight, I’m going to sleep like a baby,” he said, overwhelmed.

Carrillo is part of a growing demographic priced out of the rental market due to a lack of social housing and discouraging regulations against long-term rentals. The situation has worsened with the rise of holiday lets via platforms like Airbnb and Booking.com, igniting protests across Spain. Official statistics reveal a 24% increase in homelessness since 2012, now affecting 28,000 individuals. Furthermore, a Bank of Spain report states that around 45% of those living in rented accommodations face the risk of poverty or social exclusion, the highest rate in Europe.

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Spain’s homelessness crisis mirrors a broader European trend over the past decade, which is somewhat obscured by young Spaniards staying longer in their parents’ homes. Over 60% of 18-34-year-olds in Spain live with their families, the highest rate among major European economies between 2008 and 2022. Spain’s social housing represents only 1.5% of all homes, far below the European average of 9%.

The competition for private rentals in Madrid is fierce, with about 40 responses for each listing on the market, reports property website Idealista. Despite a socialist government’s plan to add 184,000 public housing units in the next three years, Prime Minister Pedro Sanchez aims to elevate the social housing stock to match the European average by 2027. The Bank of Spain estimates, however, that an additional 1.5 million homes will be necessary to achieve this target.

Currently, new home constructions lag significantly behind demand, with annual builds at 90,000 units compared to 650,000 in 2008, according to official data. Housing Minister Isabel Rodriguez recently announced efforts to formulate a new plan to meet housing needs.

Charitable organizations are stepping in to bridge the gap left by the state’s insufficient efforts. Mundo Justo (Fair World), with support from Techo, a social investment fund, offers rental homes to charity groups aiding the homeless. Techo, which floated on the Spanish stock market in April with backing from global firms like EY and CBRE, operates 230 flats. These flats, rented out to about 50 NGOs, are available at rates 30% below market prices, providing investors a way to enhance their environmental, social, and governance (ESG) scores.

Another organization, Hogar Si, rents 400 apartments to the homeless and has recently sought investors to help finance their mission. José Manuel Caballol, head of the Hogar Si foundation, emphasized the need for a mix of private and public efforts to address the social rent crisis. “We need to be much more ambitious,” he asserted.

Madrid faces additional pressures from rural-to-urban migration driven by job opportunities. Around 48,000 people are currently on the waiting list for social housing in Madrid. Diego Lozano, CEO of the city’s housing agency, outlined the city’s goal to almost triple its social housing stock to 15,000 units by 2030, but he acknowledged this still falls short of meeting demand.

A recent law that allows vulnerable individuals to stay in properties without paying rent for up to two years has also dissuaded landlords from offering long-term rentals. Landlords are now demanding rent payment guarantees that impoverished tenants cannot provide, as reported by three NGOs. Many landlords are shifting to the more profitable short-term rental market not bound by the same regulations. This shift saw a 15% decrease in long-term rental supplies, juxtaposed with a 56% increase in short-term rentals primarily for tourists, according to Idealista.

The issue has hit individuals like Carmen Cajamarca, a 67-year-old pensioner, who received an eviction notice from her flat in Madrid’s Lavapies neighborhood after the building was sold to an Argentine fund aiming to convert the units into holiday lets. Cajamarca now plans to leave Madrid but is delaying her move as she searches for new housing. “This is only for tourists… and the people who have always lived here, where are we going to live?” she questioned.

Spanish cities are grappling with the crisis by attempting to phase out or limit holiday apartments. In Cadiz, Eva Orihuela joined a local campaign after her 88-year-old mother Maria faced eviction. The local soccer club eventually bought Maria’s home, allowing her to stay at the same rent. Orihuela expressed relief but warned, “There are many more Marias.”

The acute housing crisis in Spain demands a multifaceted approach, blending governmental action with private sector cooperation and community initiatives to ensure everyone has a place to call home.