# Exercise: housing 25% cheaper (II): no displacement, no windfalls

> To make housing in Spain 25% cheaper without handing windfalls to landowners or pushing anyone out, the second half of the plan fixes in advance the public share of every rezoning and density increase, so buyers of land pay less for it, and turns that land into permanently protected homes built by limited-profit developers. While supply catches up, a free public guarantee against unpaid rent for every lease at the reference rent, in exchange for longer tenancies, protects tenants and landlords alike. Empty homes, short-term lets and energy renovation complete the plan.

- URL: https://www.radicalcentre.eu/en/articles/exercise-housing-25-percent-cheaper-no-displacement-no-windfalls
- Language: en
- Publisher: radical centre / centro radical
- Published: 2026-10-30
- Topic: Housing
- Author: radical centre
- Licence: CC BY 4.0

## Key points

- INE recorded a 12.2% year-on-year rise in Spanish house prices in the second quarter of 2026.
- Spain's Land Law requires developers to cede 5% to 15% of average buildable floor area to the council, up to 20% in exceptional cases, and to reserve 40% of new residential floor area for protected housing.
- Housing Europe puts public social rental at just 1.7% of Spain's housing stock, about 318,000 homes, with 180,000 to 250,000 households on waiting lists.
- In Vienna, every new residential rezoning reserves two-thirds of the floor area for subsidised housing, with the land cost capped.
- A public guarantee against unpaid rent, created in 2025 for young and vulnerable tenants, can be extended to every lease at the reference rent in exchange for longer tenancies.

Yesterday, in [part one of this exercise](/en/articles/exercise-housing-25-percent-cheaper-build-more-faster), we set out how to build more, faster and better connected: metropolitan compacts, permits by right, density near stations, more productive construction and commuter rail that brings cheap land within reach. All of that creates value. A plot that goes from four permitted storeys to eight is worth far more the next morning, without its owner laying a brick. If that gain ends up entirely in the price of land, housing gets no cheaper. And if rents keep climbing while the cranes work, plenty of people will have to leave their neighbourhood before the new flats arrive.

The pressure is real. INE measured a 12.2% year-on-year rise in house prices in the second quarter of 2026, and 3.4% in that quarter alone. The second half of the plan deals with who keeps the value we create, and how we protect people in the meantime.

## Land gains for the public, fixed in advance

Spain already has the tool in law. The consolidated Land Law of 2015 requires anyone carrying out an urban transformation to cede to the council, free of charge, between 5% and 15% of the average weighted buildable floor area, and regional law can raise that to 20% in exceptional cases where land is worth far more than average. The same law reserves 40% of residential floor area in new developments for protected housing, and 20% when existing urban areas are renewed. Our piece on [Spain's Land Law and its stalled reform](/en/articles/what-is-spains-land-law-why-reform-stalled) explains why that law needs stability above all.

In the areas covered by part one's metropolitan compacts, we propose using the top of the range, 20%, and adding what works best in Vienna. In 2018 the city created a zoning category for subsidised housing: in every new residential rezoning, and every increase in permitted density, two-thirds of the new floor area goes to subsidised homes, and the land cost of those homes is capped under the housing subsidy rules (the city's 2018 planning guide put it at €188 per square metre of above-ground floor area). The rest of the system is in our piece on [the Vienna model](/en/articles/vienna-model-social-housing-middle-class).

Timing makes it work. When the rule is known before anyone buys the plot, the buyer prices it in and pays less for the land. The gain stays with the public without expropriating anyone and without the developer losing money. For the value land keeps gaining afterwards, councils levy a recurrent tax on land value, shifting the weight of the IBI property tax onto the plot and cutting taxes on sales, as we explain in [what is a land value tax](/en/articles/what-is-a-land-value-tax). Sitting on a well-located empty plot becomes expensive, and building on it becomes cheap.

The ceded land needs a destination. According to Housing Europe's 2025 report, public social rental makes up just 1.7% of Spain's housing stock, about 318,000 homes, and between 180,000 and 250,000 households sit on waiting lists, with waits of up to five years in big cities. Housing Europe notes that Spain built protected housing mainly for sale ([more here](/en/articles/spain-social-housing-europe-housing-europe-2025)). The State Housing Plan 2026-2030, worth €7 billion between the state and the regions, already requires that what it funds stays protected indefinitely. We would apply the same rule to all ceded land and award it, through public competitions, to cooperatives and limited-profit developers, at regulated prices that cover real costs.

## Protecting people while supply arrives

David Madden and Peter Marcuse argue in *In Defense of Housing* that homes have been turned into commodities; their publisher sums it up: "Profit has become more important than social need." They are right about something that matters here. A tenant who can lose their home every few years lives with fear, and the fear does not wait for the new flats ([our summary of the book](/en/articles/madden-marcuse-in-defense-of-housing-explained)).

Our answer protects tenant and landlord together. Royal Decree 1135/2025 set up a state-funded line, run by the regions, that covers landlords for unpaid rent and utilities and for damage to the home on leases with young and vulnerable tenants, free of charge when it works as a guarantee. We would extend it to every lease with a rent at or below the reference index for its area, in exchange for longer minimum terms and annual rises tied to that index. That is the plan in [tenants and landlords: ending the war](/en/articles/tenants-landlords-ending-the-war-spain), and it fits what the evidence on [rent control in Catalonia and Berlin](/en/articles/rent-control-europe-catalonia-berlin-evidence) shows: stable limits on rises within each tenancy, and free starting rents on new-build homes so that building carries on.

Rent support belongs inside the same system. The Bono Alquiler Joven paid under-35s €250 a month for two years, and the new state plan extends youth rent aid to up to four years. Aid poured onto a fixed supply ends up partly in the landlord's pocket, so we would pay it only on leases at the reference rent and covered by the public guarantee, and judge it against the target of [€350 out of €1,300](/en/articles/young-people-housing-cost-350-of-1300-spain).

## Empty flats, holiday lets and old buildings

The 2021 census classed 3,837,328 of Spain's 26,623,708 dwellings as empty, based on electricity use. Most of them are where housing is plentiful, as we showed in [how many empty homes there really are](/en/articles/empty-homes-spain-how-many-really), but in pressured cities every flat counts. The Basque Bizigune programme shows the way: the public agency Alokabide takes an empty home on a six-year usufruct, pays the owner a monthly rent of up to €700, insures it and hands it back in good condition. We would take it to every metropolitan area, together with the IBI surcharge on long-empty homes, applied to any owner.

On short-term lets, Europe has done half the work. Regulation (EU) 2024/1028 has applied since 20 May 2026: every advertised unit carries a registration number, and platforms send their data to a single digital entry point in each country. With that data, councils in pressured areas can set quotas by neighbourhood and enforce them ([the register and the regulation, explained](/en/articles/short-term-rentals-spain-single-register-eu-regulation)).

Then the old buildings. The state plan puts 30% of its money each year into renovating buildings. A well-insulated home costs less to live in, and that counts as price too. We would attach one condition: a flat renovated with public money cannot be used to push a tenant out with a rent hike, and its rent rises at most with the reference index for as long as the aid lasts.

The rental protections also carry a review date tied to part one's metropolitan compacts. When an area meets its housing target and its rents grow in line with local wages for several years, the public guarantee stays and the limits on rises relax. Where the target is missed, the limits stay and the rules on what can be built widen.

## FAQ

### How do you stop landowners pocketing the gains from building more?

By fixing in advance, with stable rules, the share of each rezoning or density increase that goes to protected housing, like Vienna's two-thirds, and by taxing land value every year. Buyers of land then price that in and pay less for it.

### How much of the land value uplift do Spanish councils capture today?

The 2015 Land Law requires developers to cede free of charge 5% to 15% of the average weighted buildable floor area, up to 20% in exceptional cases, and to reserve 40% of residential floor area in new developments for protected housing, or 20% when renewing urban areas.

### How can tenants be protected while new homes are built?

With longer tenancies and annual rent updates tied to the reference index, in exchange for a free public guarantee that pays the landlord if the tenant stops paying. Spain already offers this guarantee for young and vulnerable tenants under Royal Decree 1135/2025.

## Sources

- [Housing Price Index (HPI). Second quarter 2026](https://www.ine.es/dyngs/Prensa/IPV2T26.htm), INE (2026)
- [Royal Legislative Decree 7/2015, consolidated Land and Urban Renewal Law](https://www.boe.es/buscar/act.php?id=BOE-A-2015-11723), BOE (2015)
- [The State of Housing in Europe 2025: Spain](https://www.housingeurope.eu/wp-content/uploads/2025/10/spain_the_state_of_housing_in_the_eu_2025_digital.pdf), Housing Europe (2025)
- [Planungsgrundlagen zur Widmung «Gebiete für geförderten Wohnbau»](https://www.wien.gv.at/pdf/ma21/planungsgrundlagen-gefoerderter-wohnbau.pdf), City of Vienna (2018)
- [Royal Decree 326/2026, State Housing Plan 2026-2030](https://www.boe.es/diario_boe/txt.php?id=BOE-A-2026-8872), BOE (2026)
- [2021 Population and Housing Census: households and dwellings](https://ine.es/prensa/censo_2021_jun.pdf), INE (2023)