Unspent Next Generation funds and a sovereign housing fund for Spain: what is possible

At the launch of Democracia 21 in Madrid on 10 October 2026, Miriam González asked Pedro Sánchez and Alberto Núñez Feijóo to travel to Brussels together and use the €10 billion of European funds still pending execution, as Infobae reported, for a national sovereign fund for protected and affordable housing. It is problem 10 on the party's housing list, and in our overview of the speech we called a stable housing fund one of its best ideas and promised to check the figure. So here is the check, and then a design.

Where the €10 billion went

The Next Generation EU money reaches Spain through the Recovery and Resilience Facility, and its calendar is fixed. The Commission's June 2025 guidance, NextGenerationEU – The road to 2026, says member states had to meet every milestone and target by 31 August 2026, and the Commission has to make its final payments by 31 December 2026. Today is late October 2026. The window for renegotiating the plan has closed.

Spain used that window. On 28 July 2026 the Council of Ministers approved a closing addendum to the Recovery Plan, published in the BOE two days later. It makes the final adjustment to the plan's loan package, and it explains why: Spain now borrows on the markets at almost the same cost as the Commission, so the financial advantage of the recovery loans has practically disappeared. Part of the loan envelope goes instead into a new Fondo España Crece. The ICO, the state's promotional bank, receives a capital increase of €10,891 million, financed with €1,386.5 million of grants and €9,504.5 million of recovery loans.

When the government announced España Crece in February, La Moncloa put its capital at €13.3 billion, €10.5 billion of it from Recovery Plan loans and €2.8 billion from grants, with the aim of mobilising around €120 billion of investment alongside private capital. Affordable and social rental housing heads its list of priorities, with an indicative target of up to €23 billion for rental construction and close to 15,000 homes a year.

So the party's figure is in the right range, and it describes money that has already found a home. Roughly €10 billion of recovery loans Spain had not drawn now sits in the ICO's capital, and housing is the first thing it finances. Brussels itself pointed to this route. The Commission's guidance lists equity injections into national promotional banks among the options for leftover funds, and names affordable housing as one of the mandates such a bank can take on.

One detail matters for the debate. Most of that money is a loan. The Treasury repays it, so it is cheap capital for housing, and the case for a fund rests on using it to build homes that pay their way.

What the ICO is doing with it

On 1 September the ICO opened €12,250 million of España Crece housing loans, according to elDiario.es: €6,250 million for building and €6,000 million for holding and managing rental homes. The building loan runs for 35 years, with no interest until construction ends and no capital repaid for seven years; the ICO puts up 75% and the developer 25%. Rents cannot exceed €9 per square metre. Up to 30% of a loan can be turned into a grant under EU state-aid rules for services of general economic interest, which require permanent protection and controlled returns, and the ICO has set aside €1,000 million for that. Most projects will sit on public land ceded by councils.

That is already a long way towards what Democracia 21 describes. The earlier ICO line funded by European money reached only about ten companies and 3,720 affordable homes, according to the same report, so the hard part is uptake. Housing Europe's 2025 profile of Spain adds the deeper worry. The housing ministry's budget rose from around €3 billion in 2022 to over €7 billion in 2025, much of it temporary European money due to expire by 2026–2027, while public housing spending stays under 0.4% of GDP. Its conclusion is that Spain needs a permanent, stable financing framework for social and affordable housing.

A radical-centre version

España Crece is an instrument of the current government, run inside the ICO, with targets set by ministers. A sovereign housing fund worthy of the name would take its housing compartment and give it the things that let it survive a change of government. We would build it like this.

From the left, the end product is a permanent stock. Every home the fund finances stays affordable for good and ends up owned or managed by public companies such as Casa 47, the state entity formerly known as SEPES, by regional and municipal housing companies, by cooperatives and by limited-profit associations of the kind that built Vienna's social housing. Grants are paid only where that permanence is guaranteed, which the EU state-aid rules already require.

From the market-liberal side, the fund behaves like a bank. It lends at its own cost of capital, recycles every repayment into new loans and co-invests with the EIB, through the pan-European investment platform set up under the European Affordable Housing Plan, and with private investors. It publishes each year the return on its book and the homes delivered per euro, and it opens its loans to any builder that accepts the rent cap and the permanence rule, cooperatives and small developers included, so uptake stops depending on ten firms.

And the piece that belongs to neither tradition is governance. The fund gets its own law and a board appointed for terms longer than a legislature, with members agreed by the main parties and the regions. The Commission's guidance asks exactly this of any instrument built with recovery money: award decisions independent from the government and financial management kept apart. Then the affordability rule is written into the land itself, as a protection entered in the land register for public plots ceded under surface rights, so a later government cannot quietly sell the homes off.

Put together, a bank-like fund that lends at cost keeps the money revolving, the permanence rule turns each loan into homes that stay in the affordable stock, and the independent board protects both from the electoral cycle. Democracia 21's call for Sánchez and Feijóo to act together fits here better than in Brussels. The money is already in Madrid. The joint act that would make it last is a cross-party law that turns the housing part of España Crece into a fund with its own statute, before the next government redraws it.