European Central: Spain To Provide Stipend For Young Adults Moving Out
assalve
Receiving free money is considered exciting for many people, but this time the lucky individuals will be young Spaniards. The Spanish government will provide a stipend of 250 euros a month for two years to young Spaniards under the age of 35 in order to entice them to move out of their parent's homes and into their own apartments. Young Spaniards will only qualify if they earn less than 24,318 euros a year. Typically in other European countries, the cost to buy or rent homes has increased, but this is not the case in Spain. Spain has the highest percentage of young adults living at home, but this is more likely due to the high youth unemployment in Spain. From 2010 to 2021, home prices actually fell 0.5 percent, and rent only increased by about 5 percent. However, prices fell dramatically after 2011, but have been sharply increasing again in the past several years. Despite prices still increasing slower than in other European countries, young Spaniards would have had trouble taking advantage of this due to having an unemployment rate of 29 percent for Spaniards 25 years old or younger. Whether housing prices temporarily fell or not previously does not matter if young people had no income in order to pay for the rent or the mortgage.
A problem with this strategy as critics point out is this may have very little impact on the housing crisis in Spain. By providing a 250-euro stipend, may increase the number of Spaniards who have the desire to move out of their parent's homes, but the prices of homes may increase as well. This is a simple example of supply and demand. If the Spanish government does nothing to increase the supply of smaller apartments that the young could rent, then the prices of existing apartments may go up and potentially cancel out the 250-euro stipend. It has also been pointed out that young Spaniards who make only lightly above the threshold may be angry they do not qualify for any assistance. It is logical for them to not consider it to be fair as if a young Spaniard earned only 1 euro above the threshold, they would get nothing meanwhile those who earned at or below the threshold would get 3,000 euros a year. This boosts their housing budget significantly, while the worker earning an additional euro has significantly less in his housing budget. This is concerning as the young Spaniard receiving no assistance may struggle to pay for housing if housing prices soar due to a surge in young adults entering the housing market.
Besides the previously mentioned problems, the stipend also does not consider that housing costs vary throughout Spain. The provinces of Madrid and Barcelona lead the way with high housing costs, trailed by smaller provinces such as Leon and Jaen. While Spain has made it clear that it wants to attract people to areas rapidly losing population, these areas are losing areas due to a lack of jobs rather than due to the cost of living. This stipend is unlikely to push young workers to smaller towns or the countryside if there are no jobs to be had. There is also the point that the stipend is only for two years, making it unlikely that young Spaniards would be willing to make a large move only because they will receive 6,000 euros in rental assistance for two years.
A lack of housing available for rent can be traced back to Spain’s policies. Spain had tough regulations which gave renters a lot of rights such as the ability to extend their lease until their death and surviving family members had the right to assume the lease. In turn, this turned people away from becoming landlords. This led to rents starting off at higher prices in order to try to keep leasing profitable. In 1985 the Boyer law eliminated the responsibility of landlords having to extend the lease throughout the life of the tenant, but it did not have the impact that the Spanish government wanted. The housing availability to rent did not increase after additional reforms in 1994 and 2013 as well. In 2019, the government wanted to introduce rent control to start bringing back rights towards tenants instead of incentivizing landlords, but was ultimately not included in the 2019 reforms. Catalonia enacted rent control on its own, but the Constitutional Court ruled that rent control is unconstitutional.
It has become popular to suggest that national governments need to step up and play a larger role in the housing markets since the private sector has been unable to keep up with demand. This may be a valid point in Spain. In the European Union, on average 9.3 percent of housing is typically government-owned. In Spain, only 1.6 percent of housing is government-owned. If Spain is serious about helping young Spaniards move out, then it may help if the Spanish government was more active in the housing market and even constructed more of its own housing to meet the needs of the young. If not, young Spaniards may have to continue to live with their parents for longer until they can financially afford independence. Government involvement is not always a popular suggestion, but if not through expanding public housing, the national government needs to come up with a way to incentive the construction of affordable apartments. Rather than trying to help Spaniards cope with prices that would continue to grow if more tried to live on their own, more housing needs to be built. This is important for the future of Spain, which like the rest of Europe, has a fertility rate below replacement. This will lead to the country’s population to shrink. This is a problem as there will be fewer younger Spaniards to work, meaning fewer people to pay taxes which is necessary to help support the pension system which a larger portion of the population will rely on.
