"Spain is one of the OECD countries with low respect for private property."."

The Institute of Economic Research (IER) has warned that Spain is one of the OECD countries where private property is least respected. Our country ranks 26th among 37 countries considered, which is below the OECD average. According to the organization, the results of the International Property Rights Index (IPRI), developed by the Property Rights Alliance, show that the guarantee of property rights in Spain is 6.1% lower than the OECD average. The differences increase when comparing Spain's results with the best performers, with a gap of 19.5% compared to Switzerland, which had the best scores in 2021. This situation is repeated across all three main pillars (legal and political environment, material and intellectual property) that make up the Index, with Spain falling below the OECD and EU averages, "and with significant gaps compared to economies that perform better," according to the IER. The only exception is the better result that Spain achieves in property registration, where it ranks seventh in the world, and in patent protection, exceeding the OECD average in both cases. The IER believes that this index confirms the close link between stronger and better protection of property rights and a higher level of economic development and prosperity. Thus, countries with the best results in the IPRI, meaning those that better protect private property, have a higher GDP per capita, lower poverty levels, high competitiveness, as well as higher levels of innovation and lower levels of corruption. In fact, the IER notes that the average GDP per capita in countries that rank highest in the global IPRI is 19 times higher than the GDP per capita of countries with the worst results in this indicator.

Housing Law

The President of the Institute of Economic Research (IER) and its General Director Inigo Fernandez de Mesa and Gregorio Isquierdo warned on Wednesday that the draft Law on the Right to Housing "violates property rights and creates imbalances in the rental housing market." The IER points out that if the goal is to facilitate access to housing, "it is essential to put an end to illegal occupation, rather than burden property owners, especially large landlords, with responsibilities that should be handled by government authorities." This was stated during the presentation of the magazine "The Necessity of Ensuring Private Property in Spain as a Condition for Improving the Rental Housing Market." Thus, the organization believes that the "interventionist" measures outlined in the future Housing Law create "uncertainty and legal ambiguity" and are "ineffective and counterproductive" for improving access to housing.

Solution to the rental issue

The IEE believes that the solution to the housing rental problem in Spain lies in strengthening property rights rather than imposing rent controls in high-demand areas. In this context, it warns that rent control "is not only ineffective in improving access to the rental housing market, but is also counterproductive, as it worsens the quantity and quality of supply, harming and discriminating against lower-income groups who would like to benefit." In fact, it warns that "due to this artificially induced reduction in supply," preference will ultimately be given to tenants who can offer more guarantees and/or have a lower risk of defaulting on rent. "Thus, a measure that is supposedly intended to be a temporary solution to the problem of access to rental housing, until the real imbalances in the market are addressed, ultimately exacerbates the stated imbalance between supply and demand and intensifies the problem. It follows that this should not even be considered a temporary solution," emphasizes the IEE. In this context, the IEE points to available international precedents regarding rent control (San Francisco, New York, Boston, Stockholm, Paris, or Berlin), which indicate that at best "rent control is virtually ineffective in the short term in regulated areas," which typically focus on more expensive rentals, "and always at the expense of shifting pressure to the unregulated segment and creating a serious reduction in the supply of rental housing." In Spain, the IEE mentions rent control measures implemented in Catalonia, concluding that "this has not only led to a significant reduction in the supply of rental housing but has also resulted in a counterproductive dynamic that should serve as a warning of what future government legislation may bring."

Illegal occupation of housing

At the same time, the IEI considers the "growing legalization" and "tolerance" that illegal occupation of housing has received in the Spanish legal framework to be "alarming," "which means a denial of the essential content of legal property rights and the inadmissibility of this in most cases of criminal activity." "This regulatory tolerance towards illegal occupation and property violation is unacceptable for a developed society and causes serious damage to our institutional framework, along with all the negative economic consequences that accompany it. By protecting this criminal activity, Spain becomes a unique case for us in a comparative context," the organization states. According to the IEI, the new Housing Law represented an excellent opportunity to tackle the problem of illegal occupation and prevent the growing number of appeals to the Constitutional Court against the housing laws of autonomous communities. "However, this is a missed opportunity, as these issues were not addressed and developed in future legislation. Moreover, the mentioned Draft Law recognizes the right to temporarily suspend evictions and other processes of regaining possession of housing for up to four months for occupants, with or without rights," concludes the IEI.