We all want to have a home to live in. Whether owned or rented. Without a home, we cannot say that we have a decent life. It is, along with access to water and electricity, one of the basic necessities of life. At the same time, we also want to make "fortune" with the opportunities offered by the development of other business models. But what happens when need and desire clash? This is when institutions must act with the skill and capacity expected of them, and accommodate both interests. However, institutions are made up of people who don't always get their decisions right the first time.
When the business model we know as Vacation Rentals (VR) began to threaten access to housing for all those workers on the islands, reducing supply (many homes were exploited as VR) and causing a price increase, the first reaction of the institutions (the Government of the Canary Islands) was to regulate VR through a regulation (Decree 113/2015). The problem is that this regulation was not made to prevent the increase in prices, which made access to long-term rental housing practically impossible, but to protect the particular interests of large businessmen. How? By prohibiting VR in tourist areas and thus eliminating competition for hotel groups (People if that for another occasion). This caused VR to move to those areas exempt from the prohibition, usually inland towns, affecting the supply of housing for rent. In other words, a regulation in favor of an economic group that sought the elimination of unstoppable competition caused a deterioration in access to rental housing. Furthermore, it meant attacking the root of a business model that provides a new source of income to the islands. In other words, it allows the outsider of the tourism business to also benefit from the pie that represents the annual visit of more than 15,000,000 tourists to our islands (more than 1,400,000 chose to stay in VR in 2018).
Therefore, today, we can state emphatically that the response carried out by the Government of the Canary Islands to solve the housing problem in the Canary Islands, through the approval of Decree 113/2015, was disastrous. Why? Because it was done from a wrong approach. An attempt was made to solve a problem from a legal and interested perspective, when it should have been done from a conciliatory legal and economic perspective. This caused a problem for Canarian workers and small owners. As an example of the spurious interests behind this regulation, we have the arguments presented by the Supreme Court (STS 1766/2018), which endorsed the judgment of the TSJC on the challenge carried out by different associations. These arguments establish that "the prohibition of offering VR in tourist areas delimited in the territorial scope of the Canary Islands, according to article 3.2 of Decree 113/2015, is contrary to the principle of freedom of enterprise".
As I have already said, the problem must be attacked from an economic perspective. Like any market, the prices of any product are affected by the relationship between supply and demand. When demand rises and supply is constant, or when demand remains and supply is reduced, prices increase. In the case of Lanzarote, we have suffered the latter. Housing demand remained the same while supply was reduced when many owners began to exploit these properties as VR. This caused an increase in the price of rent, reaching up to 1,500 euros for a 100 m2 apartment. A price that could well be from Madrid. In addition, we must take into account that those who opted for the purchase of a home also found rising prices. Therefore, the solution is to increase the supply in search of the "equilibrium point" between supply and demand. And this is where the Island Housing Institute comes in.
According to the press release from the Cabildo de Lanzarote, the Island Housing Institute will be created in order to apply active policies. That is, increase the supply to reduce the demand and that the price of rent is reduced. We are facing a solution that has been claimed by economic specialists such as Juan Ramón Rallo, who have denounced how other measures such as 'rent regulation' do not solve the real problem in large cities such as Madrid or Barcelona. The main argument is that, when the price of rent derives from the dynamics of supply and demand, only two solutions can end its rise: repressing demand or increasing supply. And, we are not going to repress demand because that means forcing people not to look for an apartment.
It is true that we will have to be on the lookout with these 'active policies', given that building homes takes time and cost, and agreements must be reached between the island institution and the municipalities. For now, we can applaud the unlocking of the Maneje land for the construction of public housing. But we must hurry, because it has taken a long time to respond to this problem with the appropriate solution. If it were me, I would have already requested a demand study by areas and municipalities to find out the real needs of the island. For example, the tourist area of Playa Blanca has had serious housing problems that have led to another problem of illegal occupation. And, finally, we will have to see if these public homes will be offered in ownership or rental. The logical thing would be that it would be in rental according to a filter determined by the capacity of each family group, number of members, etc.
In short, the Cabildo must develop as soon as possible a plan for public housing in accordance with the town halls, mainly the tourist ones, to meet the needs of its workers. This is a problem for everyone, blue, red, orange or purple. We must make up for the lack of political and human vision carried out by the previous Government of the Canary Islands, during the years that it has thought more with its wallet than with its head.
Alejandro Pérez O'Pray, Political and Administrative Sciences, UNED.
