Solutions to the shortage of first homes – an interview with Sascha Ginesta

Sascha Ginesta, you have been dealing with the housing market in Graubünden for years. On 11. The second-home initiative was adopted on March 3, 2012, what has happened since then?

We saw a real building boom immediately after the adoption. Everything that was still possible was created. With increasing supply and moderate demand at the same time, vacancy rates rose between 2012 and 2018. Since 2018, however, we have seen the impact of the shortage of supply due to the ban on new construction of second homes. Demand also rose again and vacancy rates continued to fall.

Now you read in many places about sharply rising prices and almost no offers. 

That is correct. The coronavirus pandemic has further accelerated the development described above. Since mid-2020, demand has risen at an above-average rate and the already limited supply has become even scarcer. This has an impact on price trends. 

What influence did the second homes initiative and the Second Homes Act on the construction of first homes?

Initially, it was expected that this initiative would have a positive impact on the construction of first homes. The remaining building land can now only be used for primary residences. Unfortunately, this expectation did not materialize.

Why not?

Well, there are different reasons for this:
 

• Even before the second-home initiative, many municipalities already had a first-home quota for new builds. This means that first homes were automatically created with the second homes. That has been dropped.
• The existing building land was not available. The owners do not want to build on it or sell it. There are various reasons for this. For example, because it protects views and privacy or because it serves as an investment. Building land hoarding is taking place. 
• The revised cantonal spatial planning law forces municipalities to reduce building land reserves. This prevents additional new construction projects for primary residences. 

Does this mean that the Second Homes Act actually has a negative impact on first homes?

Yes, because the shortage of supply described above and the price trend have also increased the pressure on properties that are currently used as primary residences but are regarded as secondary residences under the old law. When such apartments are sold, a primary residence is practically always lost. In addition, the municipalities will no longer be able to compensate for the consequences of the Spatial Planning Act and the lack of available building land in the future. This means that despite rising demand in the first-home sector, supply cannot be increased here either. There is a housing shortage in all areas. This is a toxic mixture. 

In many places, you can sense a certain resignation in this situation. Do you see any possible solutions? 

There are definitely possible solutions. I see a solution triangle with fields of action and measures in which the municipalities and the canton have a duty. 

What does your solution triangle look like?

It consists of the three main fields, each with associated sub-fields of action: 

1. housing promotion

1.1 Promotion of first-time home building
1.2. Mobilization of building land in own portfolio 

2. measures for second homes

2.1. Interpretation of the Second Homes Act
2.2. Local law on second homes 

3. active spatial planning

3.1. Strategy for residential zones and overall revision of local planning and building law
3.2. Revision of the cantonal data sheet for building zone requirements
3.3. Revision of cantonal spatial planning law

That already sounds very concrete. Can you already name possible measures for the individual fields of action? 

Yes, with pleasure. The measures listed below are not exhaustive! The best place to start is with the measures where the municipalities have a direct influence. 

1. housing promotion

Housing subsidies could include, for example, a utilization bonus for primary residences or financial incentives if someone converts their property into a permanent primary residence, or property rights in the event of overuse, e.g. if a hotel or commercial property is converted into a primary residence. Mobilizing one’s own building land is a matter of course. The aim is to ensure that the building land owned by the municipalities is used efficiently and built on. Whether a municipality builds itself, contributes the building land to a housing cooperative or foundation or sells it is up to each municipality to decide individually. 

2. measures for second homes

There is room for interpretation in the application of the Second Homes Act when it comes to building permits. Today, these are often generously designed for the construction of second homes. The licensing authorities could become stricter here and, in cases of doubt, decide in favor of first homes. Art. 12 of the Second Homes Act gives the respective municipalities the option of taking further local measures in the event of undesirable developments. These could be, for example, the following: 
 

• Incentive tax on change of ownership
• First-time occupancy rates for conversions and new builds
• Restriction of extensions
• Restriction on expansion of buildings worthy of protection
• Restriction on cross-financing Hotel
• Restriction of managed apartments

These measures do not necessarily have to apply to the entire municipal area. They can also only be used for the area intended for primary residences. Whether and which measures are applied and to what extent must be decided individually by each municipality based on its own starting position. It seems important to me not to choose measures that are too extreme, but rather a well-coordinated mix. It must not lead to market regulation, but should provide the necessary guidelines for future location development. 

3. active spatial planning

The municipalities need a clear strategy for their residential zones. Who do you want to create living space for and what are their needs? In short: where should what be built for whom. On this basis, the building zones in the relevant areas are to be defined and designed by means of the Building Act in terms of utilization, building heights, etc. Rezoning of building land from unattractive residential areas to more attractive ones can also play a role. Another tried and tested means of revising the Building Act is the obligation to build on vacant plots of building land, which would prevent the hoarding of building land.  

And now to the two areas where the canton is called upon to act and where the newly constituted Grand Council and the government must take urgent action. In the short term, the data sheet for the survey of building zone requirements must be revised. A number of mistakes were made in its preparation. So it relates entirely to the past. However, future prospects should also be taken into account when making a forecast. The first drafts were based on incorrect data, and in the tourist municipalities the issue of first/second homes was ignored. The new members of the Grand Council would do well to take up this issue quickly. This would allow the municipalities to regain their perspectives and scope for action in spatial planning. In the medium term, however, the Spatial Planning Act will probably have to be revised at cantonal and national level. This is drafted too uniformly and does not take sufficient account of the different starting situations in the various regions. Spatial planning in Maienfeld, Trun or Vaz/Obervaz could not be more different; let’s not even attempt a comparison with Zurich or the Jura. 

Is it obviously the politicians’ turn?

Exactly. The municipalities can initiate and implement certain, more short-term measures. For the medium-term development perspective, however, the canton will necessarily be called upon to act under the Spatial Planning Act. Municipalities can only develop if they have sufficient building land. This must become a permanent topic in the Grand Council, and the pressure on the government from the affected regions must increase. 

Thank you very much, Sascha Ginesta, for this interesting interview. 

Sascha Ginesta (real estate valuer with a federal diploma) is
Head of Marketing Graubünden and partner at Ginesta Immobilien AG