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Forced evictions and right to housing in Spain:
housing crisis or swindle?
Vanesa Valiño
Observatori DESC
www.observatoridesc.org
April 2011
- Spanish’s economic policy = unrestrained construction of
houses in private ownership
- Public housing

Social Housing (HPO) basically in private ownership

Europe: 80 public rental housing of 1.000 citizens (Holland 150)
/Spain only 10 public rental housing per 1.000 citizens

Social renting is less than 2%

Spain only allocated 0.17% of its GDP to public housing
expenditure, much less than the 0.58% European average
- Private housing

EU rental housing 30% and 40% (↓) / Spain 15%
(During the sixteens 40% rental housing)
- "The right to buy" =
. buying by those that cannot afford to buy is suppressed
. to buy a house as investment of increasing valor
a) Over- indebtedness of working families:

Rises in house prices covered by long-term mortgages (40
years)




Mortgages covered until 120% credit
Very low interest during the first years
Family Indebtedness rose: 45% in 1995; 76,7% in 2001;
143% in 2008”
Over-indebtedness affects mainly to low income families youth, migrants, poor people – and middle income groups
b) Abusive practices:
Adjustable rate mortgages (growing mortgages, increase
sharply after an initial low-interest period)

Artificial loan features to “qualify” borrowers (fake
guarantors)

Symbiosis between notaries, “rating agencies”, real estate
companies, financial institutions and public administration

Clauses that prevent clients from benefiting from
reductions in interest (ground clauses)

The collapse of the subprime market:
consequences in Spain
Sharp increase on unemployment: from 8,3% in 2007 to 22%
in 2012, disproportionately felt by immigrants and youth,
who suffer from levels of unemployment at 30% and 48%,
respectively
Fall in property value: debt often exceeding the mortages
Defaults in housing payments: evictions caused by foreclosure
proceedings or by nonpayment of rent
Forclousures proceedings
Important growing of forclousures (General Council of
the Judiciary)
2007 – 25.943
2008 - 58.686 (126,2%)
2009 – 93.319 (59%)
2010 – 93.636
2011 – 77.854
TOTAL: 349.438
Spanish Legislation
- The Insolvency Act (Ley Concursal 22/2003) only solves corporate
insolvency.
- The Civil Procedure Act (Ley de Enjuiciamiento Civil 1/2000) establishes
the bank’s right to reposses houses in foreclosure.
If no buyers appears the bank can reposses the house for 60 percent of its value
according to the estimate at the time of purchase.
The banks then can go after the homeowners, who are personally liable for the
full amount of the loan after the foreclosure
Families lose not only their only home, but moreover, they remain indebted for
life.
In contrast to many other countries, there exists no procedure to give a second
opportunity to debtors in good faith.
Rs fromPublic
the public
administration
responses
- Rescue packages to save private entities and markets – to bail-out
financial institutions -
- Code of good practices for financial institutions (March 2012)
- Judicial decisons are favoring cancellation of debt with the handing
over of property (dación de pago)
Civil society demandings


To bail-out the people
Introduce an obligatory system that would grant debt forgiveness
and cancellation with the handing over of property (dación de pago
obligatioria)
. Take advantage of the situation to convert empty homes into social
renting