Barcelona City Council plans to punish landlords who bully out tenants

Barcelona real estate mobbing or bullying

Barcelona

Jaume Asens, Barcelona’s Deputy Mayor responsible for citizens’ rights, has unveiled Barcelona City Council’s plans to punish investment funds and “big property-owners” accused of bullying tenants into moving out, reports the local press.

Barcelona’s City Council, led by former housing-activist Ada Colau, claims it has found an “administrative” basis to justify fines on any landlords accused by their tenants of “mobbing”, under Catalonia’s Right to Housing law of 2007. Administrative infractions will allow City Hall to slap fines on developers and investors without having to go to court.

The English word “mobbing” is used in Spain to refer to landlords who bully or cajole their tenants into moving out so they can renovate and sell the property, or rent to new tenants at a higher price. Mobbing implies methods that may not be legal to encourage tenants to move out against their will, and a press release from Barcelona’s Ajuntament, or City Council, claims that mobbing has become the “modus operandi” of private housing investors in the city.

Fines of between €90,000 and €900,000 could be slapped on investment funds and owners of residential property portfolios accused of mobbing. At the same time, the city authorities have developed a standard process to help housing activist groups like the Tenants Union (Sindicat de Llogaters) and Colau’s anti-eviction activists from the PAH Barcelona to report cases of mobbing.

Asens reports the City Council has identified 70 buildings in Barcelona acquired by “vulture funds” that have led to ten complaints of mobbing, four of which are being investigated, whilst administrative proceedings have been started against BMB Investment Management – the owner of the building at Calle del Carme 106 – in the heart of the seedy Raval district, for not investing in maintenance and security. A complaint has been made against BMB for allowing the building to deteriorate. “Junkies and thieves enter the building,” a tenant is reported to have said. So it seems that mobbing can be passive as well as active, and on that criteria could apply to many unrenovated buildings in historic Barcelona.

Asens applauded Barcelona as the first city in Spain to take administrative steps to penalise real estate mobbing, and described the measure as “an offensive” against the “mafia practises” of investment funds who are “degrading” the city and “upsetting” neighbourhoods. He also said that investors, who he called “vulture funds”, will be considered guilty unless they can prove their innocence.

Housing activists from the PAH, Sindicat de Llogaters, and Observatori Desc, who wield huge influence over Barcelona’s housing policies under Colau’s administration, and benefit from large subsidies since she came to power, all welcomed the move, and said they will use it to lodge many more complaints against investors and developers in the coming months.

Analysis

I can believe that some unscrupulous developers use dirty tactics to pressurise tenants into moving out against their will, and tenants should be protected from this. But contrary to what Asens claims, I doubt dirty tactics are “standard practise”, and assuming that all investors are guilty of any claims against them until proven innocent will make it riskier to invest in Barcelona buildings with sitting tenants. This will increase the value of empty buildings, but could decrease the value of many partially-occupied buildings, or make it unprofitable to renovate them. Dilapidation and neglect awaits those buildings, unless they become so cheap it’s worth taking the risk.

This latest move by Colau against investors and developers in Barcelona needs to be seen in political terms. With municipal elections coming next year, and housing affordability being one of the main concerns of voters in Barcelona, Mayoress Colau, who came to power promising to make housing more affordable, is busy announcing measures to attack private  investors, whom she calls “speculators” and “vulture funds”. As I see it everything she does (like forcing developers to dedicate 30% of new projects in Barcelona to social housing) simply restricts the housing supply and increases the risk premium of developing homes in Barcelona, driving up the cost of housing for locals. But every step she takes also involves blaming investors and developers, especially foreigners, for the failings of Barcelona’s housing policy, and plays well with her base.

About Mark Stücklin

Mark Stücklin is a Barcelona-based Spanish property market analyst, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008).