The recent appointment of Isabel Rodríguez as Minister of Housing and Urban Agenda signals, at first glance, a clear signal from the new government about the depth of the rental housing challenge in major cities. In public remarks, Rodríguez addressed the sector directly, outlining that the mandate and specific reforms are still to be defined and announced.
On the same day as the ceremony announcing new portfolios for managers, the Madrid Association of Economists organized a session at the Real Estate Economists Forum to discuss the main challenges facing both private actors and public institutions. The central goal is to expand public housing stock nationwide. During the last legislature, the government set a target: ensure that 20 percent of the residential stock has a public character within two decades. Analysts note that this objective borders on utopia, with a recent ESADE study indicating that the stock of social housing would need to grow each year to match current levels.
Equal housing alongside healthcare
The first priority raised by real estate experts is guaranteeing a budgetary framework for public housing policy. Alejandra Mora, a partner at Arenhos Advisors, a consultancy focused on affordable housing investments, compared housing to healthcare by pointing out that both rights exist in the Spanish Constitution. Yet, she notes a divergence in budget treatment that impacts housing funding today.
Similarly, Manel Rodríguez, partner and consultant at the Salas Foundation, a nonprofit that has helped develop nearly 2,000 affordable homes with support from Grupo Salas and various managers, argues that achieving below market quasi-public housing requires sustained public investment. Governments should commit to a long-term budget to build more housing.
Javier Braza, co-founder and CEO of Lagoon Living, which collaborates with Málaga City Council on housing projects and is backed by Swedish capital, also called for increased funding. He notes that in 2022 the budget for the Ministry of Transport, Mobility and Urban Agenda was only 905 million euros, a figure he considers insufficient compared with other portfolios. He urges a rollback of certain past measures and renewed support for housing initiatives.
Financing at low rates
A major obstacle to expanding affordable housing is financing. In today’s high-rate environment, securing capital remains challenging. The previous legislature saw a plan to mobilize 4 billion euros through the ICO and to leverage European funds to promote new housing at below-market rents.
Manel Rodríguez emphasizes that the capital managed by the ICO is essential but cautions against relying solely on traditional banks. He argues that alternative financing is too costly and calls for continuing support from European funds. While acknowledging potential risks, he believes the agreement between the Ministry and the ICO will be finalized and that the ICO may need to restructure to handle the volume. He also advocates for fixed-rate financing below four percent; in Catalonia, he cites deals around 2.7 to 2.95 percent, often paired with public subsidies to lower the effective rate.
Ramon RuizVisoren, a managing partner with Catalan roots who specializes in officially protected and rental properties, explains why cheap financing is crucial for turning these projects into reality. The portfolio includes about 1,300 homes and nearly 30 long-term contracts with various managers. He describes the business model as stable but with low profitability, suggesting that well-managed deals could attract pension funds and insurance firms. In his view, this is not merely a real estate venture but a finance and management enterprise. Javier Braza adds that returns on such assets can be comparable to fixed-income investments, with net profitability landing between 4.3% and 4.5%.
More public land and rent collection guarantees
Developing housing at below-market rents often requires the public sector to transfer land into public-private partnerships. In recent years, several programs have supported long-term rental management arrangements spanning from 45 to 80 years. The Community of Madrid, the Generalitat Valenciana, and municipal bodies in Madrid, Barcelona, and Málaga have ambitious plans. Ramón Ruiz urges faster land availability to meet the public service objective and notes that more land is essential to build on, especially where rents are kept affordable.
Experts stress that land readiness depends on issuing specifications aligned with private sector needs. For many managers, owning rental housing resembles owning an infrastructure asset, one that must be insulated from risk. Raul Blasco, CEO of Bialto which manages DWS rental properties including 1,700 Plan Vive units in the Madrid region, notes that current rental demand favors cash flow stability rather than infrastructure funds. He argues that rent collection must be the responsibility of the administration or that the administration should ensure timely payments. In the Plan Vive framework, applicants are prioritized in a transparent queue, and non-payers must be dealt with accordingly.
Blasco calls for robust non-payment insurance covenants and for a clear creditor position in financing documents while criticizing amendments to the Urban Leases Law that have complicated evictions. He observes a growing willingness from the administration to listen to private sector input. Lagoon Living emphasizes that while some operations are not highly profitable, management expertise can help. A unified regulatory framework is seen as essential to expand participation in future tenders and to unlock broader collaboration across the sector.