Until the next Maricarmen
In my home country, the great goal of any family is to fulfil the dream of owning a home. It is something so deeply ingrained that it has even become a slogan in political campaigns and in advertisements for things like consórcios, which are basically credit lotteries that guarantee someone access to a line of credit as long as they continuously pay a fee. Often for years on end. All of it, once again, for the dream of owning a home.
It was very strange to cross the ocean and encounter a reality where owning a home is indeed a dream, but not necessarily the primary goal of people from my generation. Because I could never have left my home and my country without the assurance that my family had a roof over their heads, rather than being stuck paying rent under contracts whose prices could suddenly rise depending on the landlord's mood, and whether or not they happened to have financial needs of their own.
I soon discovered the "secret" of these people who were much freer, lighter and more relaxed about these things than I was. Some lived rent-free in their parents' second, third or umpteenth home. Middle-class people whose parents had managed to save some money over the years, or whose grandparents had made investments decades ago that, in times of rampant property speculation, could yield very handsome financial returns. I have to admit that, thanks to my family ties, I myself live in a situation like this, which is one of the greatest privileges a young person can have in a country like the one where I live.
Other people paid extremely low rents despite living in central areas of a European city that has become one of the epicentres of global property speculation. A city where prices have grown almost exponentially since COVID, where an 80 m² two-bedroom apartment in the suburbs has practically doubled in price in about seven years. Even homes in inhospitable parts of the metropolitan area, where you have to take the car out of the garage to do practically anything, have not risen quite so dramatically in price but can still fetch absurd amounts of money when put on the market.
At least among the people around me, a distinctly middle-class sample because of the aforementioned family ties, it was quite rare to find someone renting under circumstances similar to those I faced when I first arrived in the country. Things such as renting a simple but well-located room at already exorbitant prices, which are themselves on track to double within a year or two from now; or living in an apartment found on the open market whose weight on the household budget was only manageable because the costs were split between two, three or even four people. Some of whom had come together not because they were friends, but purely out of financial convenience.
Maricarmen is an almost 90-year old woman who spent much of her life in an apartment in the centre of the Spanish capital, Madrid. Under a lease first signed by her father in the 1950s and eventually "inherited" by her, her rent was far lower than what the market charged in an affluent neighbourhood of one of Europe's largest cities.
The property was eventually sold to a company, which then resold it to a real-estate investment fund. In between those sales, the apartment was offered to Maricarmen for around 250,000 euros, a bargain for an apartment of more than 80 m² in such a privileged location. But Maricarmen, a pensioner earning no more than 1,400 euros a month and already nearing the end of her life, could never have afforded such a cost.
Six years later, Maricarmen was evicted from her home. Despite her physical limitations, being practically at the end of her life and, above all, paying her rent regularly, even if that rent was indeed below the market rate, the eviction went ahead with the support of Madrid's local authorities and the police.
Madrid is a city that gives me very complicated feelings, to put it mildly rather than say entirely negative ones. Particularly because of the opulence of its squares and palaces, built with tonnes of precious metals extracted from Latin America and never properly reinvested in the Spanish people. An exercise in pure waste, much like the many Portuguese churches displaying the same luxury, only on a smaller scale.
The city also serves as a counterpoint to Barcelona. The epicentres of Francoism and of the revolutionary anti-fascist movement never quite abandoned their roots. The current president of the Community of Madrid, Isabel Ayuso, is a member of Spain's People's Party, which has increasingly aligned itself with far-right positions. A natural development considering how many widows and widowers of the Spanish dictatorship of the last century can be found there.
I do not mean to say that something like what happened to Maricarmen could never happen in Barcelona. But the local government would probably have made much greater efforts to keep her where she was. Indeed, beyond the now infamous anti-tourist and anti-"expat" protests, which have only helped increase property speculation and consequently the cost of housing for those who actually live in the region, Barcelona also has many housing cooperative initiatives aimed at increasing the supply of homes and consequently reducing the cost of keeping a roof over families' heads.
The outcome of Maricarmen's saga so far is that she has returned home. Under an agreement with the local government, forced by protests involving thousands of people surrounding the pensioner's residence, the real-estate fund that bought her home receives the market rent while the tenant continues paying the same 500 euros as before. But as soon as she leaves, for whatever reason, the fund will be free to put the apartment back on the market at whatever price it pleases.
A couple I know rented an apartment in one of the trendiest neighbourhoods of the city where we live. Despite the apartment being reached through some rather treacherous stairs, it was excellent in terms of both location and space. Having lived there for several years, they even carried out some repairs to the property, whose costs were later deducted from their rent.
Unlike Spain, Portugal does not have particularly powerful local governments. And even if it did, the culture of popular resistance seen in Barcelona or even Madrid seems almost nonexistent in a country that became a democracy thanks to the military growing tired of fighting a colonial war well into the 1970s.
The current government has already taken measures to "make the rental market more flexible", and is about to introduce further measures that will effectively create countless Maricarmens across the country. Portugal, like Spain, also "suffers" from virtually lifelong rental contracts with prices far below market rates. The new laws would in theory still protect cases such as Maricarmen's. But like any southern European country, this is a land of well-written laws that are almost always very poorly enforced.
The couple I mentioned did not even have to wait for the new law to suffer from its effects. Instead of automatically renewing the contract, the landlord chose to terminate it unilaterally despite the penalty this entailed. Because they could charge the next tenant, whether the former residents or somebody new, at least twice as much in rent. In fact, the apartment was ultimately rented out for even more than the amount proposed in the potential new contract offered to the couple, probably because there was fierce competition for it.
Unlike other couples in similar circumstances, they still managed to remain housed within the city. But in an area much further away from the once-fashionable neighbourhood where many gatherings for long D&D sessions had taken place. And in a smaller place as well.
Another couple who are friends of mine are now on the verge of suffering the same fate. Their contract was renewed at the old price, but for only one year. The place where they live is neither as central nor as fashionable, but it suffers from the same problems affecting the rest of the city, and why not say it, the entire country.
The "housing problem" is a perennial issue in Portugal and across the rest of the continent. A self-inflicted problem that has once again worsened since the end of the Soviet Union, when the European Union saw a "green light" to begin implementing policies that would bring it ever closer to the United States in socioeconomic terms.
It must be acknowledged here that the EU itself recognises these problems. Countless studies and reports have already been produced on the issue, and even surprisingly interventionist solutions, considering the Union's political leanings, such as increasing the supply of public housing, have been proposed. But these are not mandatory policies that member states must follow. They remain entirely free to ignore Brussels' recommendations and continue along their own liberalising paths.
This is the path chosen by the country's current government. There is a "belief" that supply can be unleashed through deregulation and, above all, by offering ever greater financial incentives to potential landlords and home sellers.
To "stimulate" the rental market, contracts are becoming increasingly easy to terminate (by the landlord), evictions are being made easier, and the concept of "moderate rent" has been created, under which rents of up to 2,300 euros per month - which would require a monthly salary of around 3,600 euros for someone trying to afford such a cost on their own, or nearly four times the national minimum wage - are taxed at only 10% for the landlord, compared with 28% under the standard regime.
There are no plans for any significant increase in the supply of public housing beyond the units that began construction under the previous government, led by the centre-left party, through an EU investment programme. Housing cooperatives, one of the initiatives most heavily promoted by specialists in the field because they represent a potential public-private solution, receive endless promises but no guarantees that public policies will actually be implemented even just to comply with the legislation that remains in force for them.
I can even agree that the problem is fundamentally one of supply. But it also matters where that supply comes from, and where it is provided. A house is not some ethereal commodity that can be moved from one place to another. A home in Portalegre will never be worth more than its counterpart in Lisbon because Portalegre does not offer the same benefits as the capital. From access to conveniences such as supermarkets and shops to essentials such as healthcare, education and employment.
So the concept of "increasing supply" is completely meaningless when it does not imply increasing supply precisely where demand is overwhelmingly concentrated. Today, that means the country's major urban centres, which also concentrate much of its economic activity because of structural and historical issues that have never been resolved.
A country with more medium-sized cities might not face such enormous dilemmas in this regard. But not even the few medium-sized cities that do exist here are safe from property speculation and the resulting (enormous) rise in the cost of housing for anyone who insists on living in this country.
However much Portugal, and perhaps the EU itself, may refuse to admit or address the problem in the way it needs to be confronted, it will eventually become unavoidable unless their proposal is simply to allow a major social crisis to continue and eventually watch countless young people collapse under a system in which they can no longer leave their parents' homes. Addressing it means getting directly involved through public housing and through those public-private partnerships such as housing cooperatives.
As with almost everything that happens in the US and reaches Europe with a delay, the same happened with YIMBYism and its use as justification for liberalising and "freeing" the continent's housing supply. That is simply not what we are seeing.
Simply supplying more apartments in central areas across the continent has not reduced their prices, whether for sale or for rent. Pressure on housing continues because speculation, which is ultimately nothing more than the pursuit of a return on investment, continues as well. These are market forces at work, and I do not think we need much more evidence that even regulating those forces is no obstacle to making inaccessible something that should be a guaranteed right for every citizen.
Public housing does not have to operate at a loss. But it has the advantage of not leaving access to housing entirely in the hands of the market. If you prefer, you can even see public housing as a moderating force on market effects, with increased supply at prices below the equilibrium point of the curves ultimately "pushing" that point of intersection towards more affordable prices.
The state, at least the Portuguese one, also has a broad range of legal mechanisms available to use publicly owned land, houses and buildings, or even property belonging to others, for public housing. But with government ideology and interests, whether from outside or within, working against it, these tools will never be used for such purposes.
"Never" may be too strong a word. As I said earlier, a collapse brought about by exhaustion with the democratic system and with an extreme-centre whose sole purpose is to cushion the effects of managed decline may eventually lead us down such a path. Short of an eventual break with the forces currently in place, the "housing problem", and the Maricarmens that come with it, will proliferate across Europe.