Input data: the team of Barcelona Mayor Ada Colau sent letters to 14 large property owners, threatening to forcibly buy out 194 vacant residential units owned by them if they do not put the apartments on the market.
Anonymous question
Of course, the provided input data is incomplete. Here, for example, is a little more information about rental market regulations in Barcelona, gathered from a quick Google search:
- 2011: Licensing for the short-term rental market introduced in Barcelona
- 2014: Issuance of short-term rental licenses in central Barcelona suspended
- 2018: Measures to combat rental regulation violators tightened
- August 2020: Temporary ban on short-term rentals (less than 30 days) introduced
- September 2020: In Catalonia, rental rates restricted
- February 2021: In Catalonia, there are plans to make the temporary ban on short-term rentals permanent
So, look at what is happening. First, the Olympic Games are held in the city; for this occasion, the state pours serious money into increasing the city’s tourist appeal. Tourists flood the city. Demand for short-term rentals spikes. Residents who rent housing themselves begin to grumble: rental prices have risen for them. Locals who are not tied to the tourism market also grumble: noisy tourists are wandering everywhere, and there is no room to move. The government listens to the voters’ opinion and begins to tighten the screws. Time and again, it demotivates property owners from renting to tourists—at high prices and for short terms—and instead demands they rent to locals—cheaply and for the long term.
What do property owners do when they realize that renting to anyone under the current rules is unprofitable? They freeze the business and wait for favorable conditions. Or they rent completely “under the table,” so that officially the housing stands empty. What does the government do? It begins to “force” them to the market, demanding that the housing be listed for long-term rental at regulated rates, threatening otherwise to forcibly buy out their property at prices set by the government itself.
With exactly the same success, one could talk about forcing peasants to the market who, for example, are forbidden from selling what they grew personally at the city market and are instead required to hand it over for pennies to wholesalers appointed from above.
How can I feel about this? Naturally, strongly negative. There is no need to call a state plan a “market”; it only introduces unnecessary confusion.
The Barcelona case shows very well how even a seemingly single benevolent government intervention (investments in infrastructure for the Olympic Games) leads to a market distortion, which causes public discontent and provokes further strengthening of government regulations. So, the best answer to the question of how the state can help you still remains the eternally relevant answer: Laissez faire et laissez passer.
