Barcelona’s city council, led by the former housing activist Ada Colau, is using the Covid-19 crisis to justify moves to expropriate empty homes in the city. But the real story is the collapse in house building in the city since Ada Colau took over. Everything else is just noise to cover for failed policies.
Thanks to the coronavirus crisis, which has left more families unable to pay the rent, the existence of empty flats in the city is intolerable, argue Colau’s hard-left team led by housing councillor Lucía Martín.
According to local press reports, Colau’s officers have written to 14 property-owning groups warning them that if they don’t get their empty flats in Barcelona rented within a month, they will see them expropriated at half the market price, and potentially face fines between €90,000 and €900,000.
Colau has 194 flats that have supposedly stood empty for more than two years in her immediate sights, but a total of 426 empty flats are earmarked for expropriation further out. The local press reports the big picture is more like 1,000 homes in Barcelona that the city council under Colau hopes to confiscate in this way, with heavy fines on top.
Why are there any empty homes in Barcelona belonging to institutional groups, who prefer cash flows to costs? I’ve spoken to a few people in the industry about this, and the answer is usually because they can’t find buyers or tenants under reasonable conditions. The properties are often blighted in some way, with squatters or surroundings that keep away good buyers or tenants, and/or they need a significant investment to be made habitable.
Half the 426 properties earmarked for expropriation by Colau reportedly belong to the Sareb – Spain’s so-called ‘bad bank’ – which was set up to take on all the garbage real estate in Spain after the crash. Anything the Sareb still owns is likely to be unappealing, and anyway, it belongs to the Spanish state, one way or another.
The international press has picked up this story, and from the articles I’ve seen, you could be forgiven for thinking there are greedy property groups hoarding lots of nice, empty, ready to move into flats in wholesome neighbourhoods of Barcelona, rubbing their hands as they speculate on ever rising prices. There is no truth in that at all, and anyway, it doesn’t make any sense. Empty flats are just a drain on cash, whilst rented flats are a source of income. There are no property funds in Barcelona who want empty flats if they can help it, and house prices in Barcelona are currently on the slide.
As usual, when it comes to housing policy, and Barcelona’s hard-left Mayor Ada Colau, nothing is what it seems. She would have you think that the city’s housing affordability crisis is all down to speculators and vulture funds hoarding empty homes, and greedy landlords manipulating the rental market. In fact, there is a structural shortage of housing in the city made worse by her policies, and a planning department that is slow and inefficient.
Nobody is going to invest in building or renovation projects above a certain size in Barcelona until Ada Colau has backtracked or gone. It’s way too risky, and a guaranteed way to lose money. That is the real story, not some headline-grabbing initiative to seize empty homes from financial boogeymen, which won’t do anything to meaningfully increase the supply of affordable housing available to the good residents of Barcelona. It’s a good distraction though.