Juan Van-Halen DIRECTOR GENERAL HOUSING AND REHABILITATION MADRID REGION NEW IDEAS ON AFFORDABLE HOUSING

·· Ayudas a la rehabilitación de vivienda ·· The housing market in Spain and in the Community of Madrid(1) The housing market: Some facts SPAIN Population: 47 millions of people  Housing stock: 25,1 millions  Primary residences: 16,7 millions  Rent: 2,2 millions  Rent: 13,19 %  Housing starts 2009:  Households created 2009:  Average price: 1.865,7 €/sqm COMMUNITY OF MADRID Population: 6,4 millions of people  Housing stock: 2,8 millones  Primary residences: 2,2 millions  Rent: 0,45 millions  Rent: 19,97 %  Housing starts 2009:  Households created 2009:  Average price: 2.591,2 €/sqm Affordable Housing 2

·· Ayudas a la rehabilitación de vivienda ·· The housing market: Evolution HOUSING STARTS 1991 – Spain Madrid Affordable Housing

·· Ayudas a la rehabilitación de vivienda ·· The housing market: Public housing PUBLIC HOUSING STARTS 1991 – Affordable Housing Madrid Spain

·· Ayudas a la rehabilitación de vivienda ··  All Spanish citizens have the right to access adequate housing. (Art. 47 Spanish Constitution)  Housing policy: Exclusive competence of the regions (art Spanish Constitution)  Central Government must establish the basis for the overall planning of economic activity and housing credit Legal framework 5 Affordable Housing

·· Ayudas a la rehabilitación de vivienda ·· Legal framework for housing policy (II) REGULATED MARKET (affordable, protected market) regulated, subsidized, limited prices and reserve of land 6 Affordable Housing FREE MARKET

·· Ayudas a la rehabilitación de vivienda ·· New approaches to housing policy From “social housing” to “affordable housing”  Who should build public housing? – Role of private initiative - Public Private Partnership (PPP) - Who should benefit from public housing? Income ranges  Subsidies vs. Limited Prices.  Reserve of Land  Qualitys Housing – Technical Building Code. 7 Affordable Housing

·· Ayudas a la rehabilitación de vivienda ··  A necessary condition for effective housing policy  Regulation of land development  Land Law of Madrid Region – Law 9/2001  Reserve of land for affordable housing: – 50% of new developments Reserve of Land 8 Affordable Housing

·· Ayudas a la rehabilitación de vivienda ·· BENEFITS FROM AFFORDABLE HOUSING POLICY 9  House prices 55% below free market  Subsidies for promoters (for rental housing, 30% of total cost)  Subsidies for renters/purchasers  Credit facilities (special mortgages): EURIBOR + 1,25 Affordable Housing

·· Ayudas a la rehabilitación de vivienda ·· 6. Fiscal policy Rental housing Tax benefit: 15% cost of mortgage END December 2010 Affordable Housing

·· Ayudas a la rehabilitación de vivienda ·· New ideas for housing policy Starting conditions: 50% Land Reserve Participation of private sector No subsidies: AFFORDABLE PRICE For middle classes (broad income range – 90% households) Promotion of rent market  RENT WITH OPTION TO BUY  PUBLIC PRIVATE HOUSING PARTNERSHIP 11 Affordable Housing

·· Ayudas a la rehabilitación de vivienda ·· Rent with option to buy  For young people (under 35 with incomes under €/year)  Rent for 5, 6 or 7 years + option to buy at prefixed price  50% of rents paid deducted from final price 12 Example: housing in Madrid capital Rent by month : 636 € 5, 6 or 7 years OPTION TO BUY PRICE: € (- Deducted 50% rents) Affordable Housing New initiatives

·· Ayudas a la rehabilitación de vivienda ·· New initiatives PUBLIC PRIVATE HOUSING PARTNERSHIP  Land Law - transfer 20% new developments  Concession basis – 40 years  Linked to housing needs in terms of life cycle  Rents 30% below free rental market  Objective: dwellings  Private investment: million € 13 Affordable Housing

·· Ayudas a la rehabilitación de vivienda ·· New types of protected housing 14 SOCIAL HOUSING (IVIMA) PUBLIC PROMOTION PRIVATE PROMOTION BASIC PRICES LIMITED PRICES Household income € € € RENT Affordable Housing RENT PURCHASE RENT & CALL OPTION

·· Ayudas a la rehabilitación de vivienda ·· Conclusions The Community of Madrid is a LEADER in promotion of protected housing in Spain  1 of each 4 “affordable” housing in Spain is built in Madrid  1 of each 2 housing built in Madrid is “affordable” From > affordable housing Increase of rental housing to 20% 15 Affordable Housing