First time buyers who have struggled to purchase a home since the start of the financial crisis may finally be able to make some headway. The Spanish Ministry of Development has been drafting the State Housing Plan for the period 2018-2021. They have outlined 12 proposals in response to a public consultation and these will have an impact on national policy. One of the most ground-breaking of these is to offer relief for first-time buyers and struggling tenants.
Since the financial crisis began, banks across Europe have tightened up the criteria they use for mortgage-lending, and while housing has remained affordable in rural areas of Spain, first-time buyers have struggled to gain approval for a home loan. The maximum most people are offered is 80% of the house's value.
Outside of metropolitan areas, it is possible to pick up a small and comfortable apartment for between as €50,000 to €80,000, but this still means finding a deposit of 20%, or around €10,000 to €16,000. In addition, the house purchase will typically demand another 12.5% of the purchase price in fees and legal expenses. Sourcing the total amount of finance needed has proved difficult for many young people - in spite of interest rates remaining low across Europe.
Now help will be on hand. Grants of up to €10,800 will be offered to anyone under the age of 35 and can be used as a deposit and fees. The grant will be capped at 20% of the purchase price. According to Íñigo de la Serna, Minister of public works, the grant will be available to claim at any time between 2018 and 2021 as part of the State Housing Plan. It's not just for first time buyers, but there are some stipulations such as applicants must be under 35, have an income of less than €22,635 per year and the house must be their main residence.
It remains to be seen whether this policy changes attitudes to home-ownership among young people in Spain. Many remain sceptical about buying property because they are unhappy of the idea of 'getting into debt', or they have seen media coverage of repossessions, and they do not see a mortgage as a long-term investment.
Meanwhile other young people prefer to rent in order to avoid commitment, or if they feel their position in employment is not secure. Renting is currently affordable in most areas of Spain, but in areas where jobs are more easily found, rents tend to be prohibitive, often exceeding the average monthly wage.
In Madrid, the mayoress, Manuela Carmena has announced measures to contain upwardly-spiralling prices, and this in addition to De la Serna's State Housing Plan will give young people a fresh opportunity. The maximum annual benefit to help with rent is currently set at €600 or €50 a month, but this will now rise to €900 or €75 a month.
In addition, tenants who are in extreme poverty, are disabled or have had their homes repossessed through redundancy, or because illness prevented them from working, will be able to claim between €150 and €400 a month towards paying their rent with 80% coming from central government and 20% from regional government.
The State Housing Plan also includes measure that will make it simpler to obtain home improvement, renovation or repair loans from mortgage providers. The full plan will be handed over to Spain's 17 autonomously-governed regions by May 30. Federal governments will then be asked to offer feedback and make suggestions for amendments.