Forced evictions and right to housing in Spain: housing crisis or swindle? Vanesa Valiño

1. Forcedevictionsand right to housing in Spain: housing crisis or swindle? Vanesa Valiño Observatori DESC www.observatoridesc.org April 2011

2. - 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)

3. - "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 .

4. 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)

5. 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 The collapse of the subprime market: consequences in Spain

6. 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

7. 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.

8. Public responses Rs from the public administration - 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)

9. . Take advantage of the situation to convert empty homes into social renting 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)