Housing Financialization and the State, in and Beyond Southern Europe: A Conceptual and Operational Framework

ABSTRACT

This article sets out a conceptual/operational framework designed to analyse how the state has enabled, promoted and shaped housing financialization. We build on the systematic analysis of literature and legislation in Portugal, Spain, Italy and Greece, thereby providing an overview of housing financialization in Southern Europe. We identify six modes of housing financialization (mortgage debt, mortgage securitization, social rented housing, market rental housing, housing companies, “not-for-housing housing”), characterized by relative autonomy and specific mechanisms, plus a number of cross-cutting dimensions. Our conceptual/operational framework allows to systematically inquiry whether the state has passively adapted to global transformations or shaped these transformations in turn, therefore advancing two main contributions: first, contributing to a more precise conceptualization of the mechanisms of housing financialization; and, second, providing operational instruments to explore state action and policy in housing financialization beyond Southern Europe.

KEYWORDS:

• Housing policy
• social housing
• rental housing
• Not-for-housing housing (NFHH)
• semi-periphery
• political economy

Acknowledgments

We have presented earlier versions of this manuscript at the Shift Research Group of ICS-ULisboa (Dec 2020), the Encontro Annual de Economia Política (Jan 2021) and the AAG Annual Meeting (Apr 2021), receiving useful suggestions. Preliminary versions of the conceptual/operational framework have been published in Regions eZine (https://regions.regionalstudies.org/ezine/article/financialization-of-housing-in-southern-europe-the-role-of-the-state/) and in the project report (Tulumello & Dagkouli-Kyriakoglou, 2021) – Marco Allegra and Alessandro Colombo have collaborated to the latter. We are grateful to three anonymous reviewers for the honest engagement with, and constructive critique of, our work.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Supplementary material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/14036096.2023.2279529

Notes

1. In line with a consolidated tradition (see Allen et al. 2004; Arbaci 2019; Tulumello 2022), we define Southern Europe as Portugal, Spain, Italy and Greece, the four large countries traditionally associated with the familistic welfare regime – excluding the Balkan states which have distinct socio-political, urbanization and welfare trajectories, and the small Malta and Cyprus.

2. In line with the previous discussion, rather than a “new” regime, we conceptualize recent processes of housing financialization a peculiar iteration of a recurring feature of capitalist development.

3. This does not mean that accounts of the role of the state in financialization did not exist. See, for an early instance, Krippner (2011), who argues that state policies were decisive in the USA to enable financialization, but, differing from our perspective, that the latter was above all an unintended result.

4. From the definition of the Merriam-Webster Dictionary online. See https://www.merriam-webster.com/dictionary/mode. Emphases ours.

5. We used the string “(‘financialisation’OR“financialization”) AND (“housing”) AND (‘Portugal’OR‘Spain’OR‘Italy’OR“Greece”)” and translations in Portuguese, Spanish, Italian and Greek. We extended the search with specific keywords, e.g. “mortgage securitization”.

6. The official journals of the four countries (Diário da República: https://dre.pt/; Boletín Oficial del Estado: www.boe.es/; Gazzetta Ufficiale, www.gazzettaufficiale.it/; Εφημερίς της Κυβερνήσεως, www.et.gr/) and other web-based legislation host services, both official (e.g. parliamentary websites) and not.

7. The corpus includes laws (parliamentary), decrees and decree-laws (governmental, presidential or royal), legislative decrees (in Italy, laws approved by the government under a parliamentary mandate), regulatory decrees, governmental decisions and regulations.

8. PT: Decree-Law 459/1983; SP: Law 2/1981, Royal Decree 1932/1991; IT: Legislative Decree 385/1993; GR: Presidental Decree 170/1986, Law 2076/1992.

9. SP: Law 41/2007; IT: Legislative Decree 203/2005, Law 44/2015.

10. IT: Law 592/1905; GR: Law 3221/1924.

11. PT: Decision of the Council of Ministries 24 February 1976; SP: Law 44/1978; IT: Decree of the President of the Republic 917/1986; GR: Law 1078/1980. Mortgage interest deductibility was abolished in 2002 in Portugal, 2012 in Spain and 2011 in Greece; it still exists in Italy.

12. Following Aalbers (2016, pp. 106–110), we consider covered bonds to constitute instruments for the funding of the mortgage market – this because the fundamental difference with securitization is that covered bonds do not transfer the risk of the asset to the investments. In this sense, we do not consider them to constitute an instance (or mode) of housing financialization distinct to the concession of mortgage debt. We have therefore not included covered bonds in our taxonomy, also in line with their generalized absence in the literature on housing financialization.

13. PT: Decree-Law 453/99; SP: Law 2/1981, Law 19/1992; IT: Law 86/1994; GR: Law 2801/2000, Law 3156/2003.

14. PT: Decree-Law 219/2001.

15. Law 44/2002; Law 41/2007.

16. Regulation (EU) 2017/2402.

17. PT: Law 69/2019; GR: Law 4706/2020.

18. No social housing exists in Greece since the abolition, in 2012, of the Workers’ Housing Organization (Οργανισμος Εργατικής Κατοικίας) under request of the memorandum of understanding signed with EU institutions for the second bailout (Law 4046/2012; see EC 2012, 110).

19. Decision 2005/842/EC, n. 16. See, for the adoption in IT: Law 244/2007, Interministerial Decree 22 April 2008.

20. The term housing sociale is used to refer to privately sponsored housing that is either affordable or targeted to specific groups.

21. Bank foundations, created within the reform of the Italian banking sectors (Legislative Decree 153/1999, Law 212/2003), are at the same time the owners of the banks and their charitable arms.

22. Decree-Law 159/2007 converted into Law 222/2007, Decree-Law 112/2008 converted into Law 133/2008, Decree President of the Council of Ministries 16 July 2009, Decree-Law 47/2014 converted into Law 80/2014.

23. PT: Law 46/1985, Decree-Law 321-B/1990, Law 6/2006; SP: Royal Decree-Law 2/1985, Law 29/1994; IT: Law 392/1978, Decree-Law 333/1992 converted into Law 359/1992, Law 431/1998; GR: Law 1703/1987, Law 2235/1994.

24. PT: Law 30/2012, Law 31/2012; Law 4/2013.

25. PT: Decree-Law 19/2019; SP: Law 11/2009; IT: Law 296/2006; GR: Law 2778/1999.

26. PT: Law 64-A/2008, Decree-Law 19/2019; SP: Law 11/2009, Law 16/2012; IT: Decree-Law 133/2014.

27. PT: Decree-Law 308/2007, Decision of the Council of Ministries 50-A/2018, Decree-Law 69/2019; SP: Royal Decree 233/2013; IT: Decree-Law 47/2014 converted into Law 80/2014; GR: Joint ministerial decision FEK-B-792-2019. In Italy and Spain, rent benefits are also provided by regions.

28. Decree-Law 1/2020.

29. PT: Law 58/1998. SP: Law 7/1985. In Italy, since the regionalization in the 1970s, former Autonomous Institutes Public Housing (Istituti Autonomi Case Popolari) have been transformed into companies (aziende).

30. PT: Law 53-F/2006, Law 50/2012; SP: Law 7/1985. IT: Decree-Law 50/2016.

31. PT: Decree-Law 128/2014; GR: Law 4276/2014. In Italy, touristic regulation is a regional competence and the STR sector is generally liberalized (see Apollonio and Carosella 2018[2014], pp. 11–97).

32. PT: see Dominguez (2017, 77); GR: Law 4446/2016; IT: Decree-Law 50/2017 converted into Law 96/2017, Decree-Law 104/2020 converted into Law 126/2020.

33. Legislative Decree 23/2011.

34. PT: Decree-Law 36,212/1944, Decree-Law 41,532/1958, Law 608/1973; SP: Law 84/1961; IT: Decree of the President of the Republic 2/1959.

35. SP: Royal Decree-Law 2/1985; IT: Law 560/1993, Decree-Law 351//2001 converted into Law 410/2001, Decree-Law 47/2014 converted into Law 80/2014.

36. e.g., in GR: Presidential Decree 170/1986 (directive 86/566/EC), Law 2076/1992 (directives 77/780/EMU, 89/646/EMU).

37. PT: Decree-Law 409/1982, Decree-Law 20/1986; GR: Law 2778/1999.

38. PT: Decree-Law 71/2010; SP: Law 16/2012.

39. PT: Decision of the Council of Ministries 52-A/2015.

40. PT: Law 29/2012, Regulatory Decree 15-A/2015; GR: Law 4146/2012.

41. Decree-Law 249/2009.

42. IT: Law 106/2016, Legislative-Decree 112/2017.

43. Fund for Orderly Bank Restructuring (Fondo de Reestructuración Ordenada Bancaria): Decree Law 2066/2008) and Company for the Management of Assets proceeding from the Restructuring of the Banking System (Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria): Law 9/2012, Royal Decree-Law 18/2012, Royal Decree-Law 24/2012, Royal Decree 1559/2012.

44. PT: Decree-Law 209/2000; IT: Legislative Decree 104/1996, Law 448/1998, Legislative Decree 58/1998, Law 130/1999, Legislative Decree 300/1999, Decree-Law 351//2001 converted into Law 410/2001, Decree of the Ministry of Economy and Finances 17 April 2003, Law 296/2006, Decree-Law 112/2008 converted into Law 133/2008; GR: Law 2801/2000.

45. PT: Law 82-B/2014; IT: Legislative Decree 85/2010, Decree-Law 98/2011 converted into Law 111/2011, Law 183/2011, Law 98/2013; GR: Law 3986/2011, Law 4336/2015.

46. PT: Law 31/2014, Decree-Law 80/2015; GR: Law 4269/2014.

Additional information

Funding

This article is an output of project ‘Financialization of housing in Southern Europe: policy analysis and recommendations’, commissioned by the European Parliament, group The Left in the European Parliament, office of MEP José Gusmão (Bloco de Esquerda). Data on Portugal were collected in the context of project ‘HOPES: HOusing PErspectives and Struggles’ (Fundação para a Ciência e Tecnologia; PTDC/GES-URB/28826/2017) and Simone Tulumello’s contract (FCT; CEECINST/00045/2021/CP2818/CT0002).