Public guarantees for rent, a possible stimulus for the emancipation of young people

The emancipation rate of young people in Spain continues to be a constant source of political and social concern. Last week we knew data regarding Youth Council, that through the data of the Active Population Survey (EPA) He placed the emancipation rate of young people aged 16 to 29 years in 15%, the lowest percentage since 2006. If we compare somewhat closer periods in time, such as 2013 and 2023, we can observe how, although emancipation rates Among those under 22 years of age have changed, a huge gap has been generated in the last decade in the emancipation of young people aged 25 to 32, with falls greater than 10 points.

Although the government has already tried to increase the emancipation rate with measures such as the young rental bonus or the guarantees to the purchase of housing, the low budget allocation and the design itself makes it very difficult for these measures to have some tangible effect on the Probability Emancipation of young people. More recently, the Government has opted for the possibility of establishing a luck of rental for rent for vulnerable and children under 35 years as long as the rent is below the reference price set by the Government, a measure that, unlike Of the above, it can have a strong and tangible effect on the emancipation rate.

To understand why such a policy can enhance the emancipation of young people, it is necessary to begin by pointing out an uncomfortable truth, the risk of rental of rent in Spain is high, economically relevant and much greater with respect to its prepaandemics levels. This is attest to the data from the Living Conditions Survey (ECV) That the INE annually elaborates, where it is documented that 12% of households under rental have two or more delays in payment throughout the year, a percentage widely exceeding 8% corresponding to 2019.

This increase in the probability that households for rent are usually delayed in payments introduce an economic insecurity component that is amplified if the tenant is young or vulnerable, collective that usually cannot be covered by private insurance, in many cases by the Lack of job stability. In this circumstance, public insurance can introduce sufficient certainty to increase the rental offer for young people and, therefore, its emancipation rate.

To approximate the effects that a policy like this can have on the rental market in general, and on young people in particular, the case of Visale, a similar public insurance policy applied in France, is a good point of reference.

In France, Visale offers a coverage of up to 36 months of rent, and imposes several eligibility conditions. First, the rent cannot exceed € 1,300 (€ 1,500 in Paris), nor the effort rate (the weight of rent in household income) can exceed 50%, and was originally designed for young people under 30 and students, although later older vulnerable people were incorporated. In the recent work of Bézy, Levy & McQuade (2024), the effects of this policy on different variables of interest are evaluated, such as the probability of rent among young people, mobility between municipalities and housing offer.

The first results suggest that the policy had a positive and strong effect on the probability that young people would access the private rental market, an effect that was growing over time, as the program was extended, and came to add up close of 1.6 points in 2022. If we consider that the probability of a young man of 25 to 30 years of being emancipated in a private rental is around 25%, the effect measured in relative terms is not negligible. Additionally, the authors find that this increase in access to rent is produced towards municipalities of higher wages and standard of living.

However, a policy like this is not exempt from problems. First, there may be moral risk problems, which would result in very high default rates among program participants. It is worth noting that, at least in the French case, this has not been the case. Although it is true that the unpaid rate at the beginning of the policy was particularly high, it was converging at normal levels that, although they are higher than the average of the private rental sector, can be explained by the difference in the characteristics of the tenants.

Secondly, it may happen that this policy does not achieve another of its objectives, to increase the supply of housing for rent. This seems to have been in case in France, where the effect of the policy on the offer has been void, which leads to the authors of the study to think that politics could have negative effects on access to the rental of young people older than 30 years (not eligible).

The economic insecurity produced by rental tax , among them young people.

Redirect the efforts of the public sector of rental aid and purchase guarantees, whose negative effects on prices have already been documented in numerous academic works, to reduce the risk associated with the rental of certain groups, it can not only increase the emancipation rate of Young people, but potentially increase housing supply.