Achieving a balanced housing system depends on two things. First, the development and availability of land tenures – such as home ownership, tenancy and intermediate tenures – and second, social housing schemes, as outlined by a recent European Commission report (‘Pilot project – Promoting protection of the right to housing – Homelessness prevention in the context of evictions’).
An important recommendation from the report is the promotion of a ‘continuum’ of land tenures (different ways of having a financial stake in your home) within the European Union. This is in line with the priorities of the United Nations’ New Urban Agenda. According to the Commission report, EU member states commit to recognise the plurality of tenure types, and to develop workable, age-, gender-, and environment-responsive solutions within the continuum of land and property rights.
But the fact is that home ownership and tenancy are by far the most conventional land tenures in Europe.
This means that intermediate tenures – a form of tenure between ownership and renting, such as shared ownership, cooperatives and community land trusts – generally do not play a significant role as far as housing access is concerned.
“Home ownership and tenancy are by far the most conventional land tenures in Europe”
Owning your own home is widespread, particularly in southern European countries such as Spain, Portugal or Malta, because being a tenant is not secure, flexible or stable enough. So it is understandable that households prefer home ownership to tenancy in these countries.
To set up such continuum of land tenures, Catalonia has gone one step further. A law passed last year aims to introducing two new intermediate tenures into Catalan law: ‘shared ownership’ and ‘temporal ownership’.
The first entitles the shared buyer (referred to as material owner) to fully possess, use and enjoy the property, thanks to the initial property share that has been acquired. It allows this shared buyer to gain full ownership through its gradual acquisition over an agreed period (not more than 99 years). The seller is the formal owner of the remaining property share, and is entitled to get rent for the share he or she does not own.
Temporal ownership implies the acquisition of the ownership by a buyer for a fixed period of time – a break from the traditional concept of perpetuity of the right of ownership. At the end of the period, ownership reverts to the seller or to a third party. In both cases duties are placed on the material and temporal owners so as to avoid depreciation due to their negligence.
“The important steps taken in Catalonia help to widen the spectrum of available land tenures, for households and all other actors in the property market”
Another Catalan law, on tenancies, is in the offing: the Catalan parliament agreed last December to give the government nine months to establish new rules in this area. And Catalonia has introduced measures to implement the 2014 EU Mortgage Credit Directive, stopping Catalan lenders from granting loans to people with negative credit ratings and obliging them to provide adequate warnings about the risks associated with non-payment of mortgages.
Away from parliament, the UNESCO-backed Housing Chair at Catalonia’s Rovira i Virgili University (URV) has established a set of principles on urban leases. Contrary to the Spanish law on tenancies, these principles advocate the implementation of legal drivers that make tenancies a real alternative to homeownership in Germany, Austria and Switzerland, such as the establishment of long-term tenancies, rent controls and the application of the emptio non tollit locatum rule (whereby if the landlord transfers the dwelling to a third party, the tenancy contract is binding on the acquirer, even if not properly registered).
These important steps in Catalonia to establish a continuum of land tenures help to widen the spectrum of land tenures available, for the benefit not only of households (as they can choose a land tenure according to their economic and personal circumstances, combining security of tenure, flexibility and affordability) but of the all actors in the property market (including credit entities, hedge funds and public administrations).
This could be a good starting point for other countries ‒ notably those in southern Europe ‒ that want to overcome the home-ownership‒tenancy dichotomy and avoid both over-indebtedness and instability for tenants.
IMAGE CREDIT: CC/Flickr.com – Werner Wilmes