Spain's Latest Housing Crisis: Criminals Posing as Fake Landlords

They're getting away with it because the scale of the country's real estate problems is just so big.

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Reuters

Can a big city apartment rented for $275 a month ever really be a bad deal? Across Spain, hard-up tenants are cashing in by renting out a new wave of cheap property that's recently arrived on the market. With water and electricity included in the price, the low rent comes across as a pretty good deal even in a struggling economy. There’s one major problem, though. The apartments are really squatted, and the people tenants pay rent to are not landlords, but gangs.

Grandly titled "mafias" by national media, these by-products of Spain's crisis roam the country's cities – Southern Madrid in particular – looking for real estate left abandoned by the many Spanish who couldn't afford to keep up mortgage repayments. Breaking through security gates, they add new locks, reconnect water and electricity and generally re-tool the flats ready for rental. As El Pais has detailed, some of these operatives are even "selling" apartments on for as little as €1,000, essentially a one-off fee for breaking in and cleaning up.

Given the practice's clandestine nature, there's no real way of measuring how common the problem is, but police have noted that in some urban neighborhoods, such as Madrid's Lavapies, such illegal sub-letting is widespread. In some neighborhoods, chunks of whole streets have reportedly been repopulated this way.

The process is illegal, of course. Often the gangs get away with it because the scale of Spain's real estate problems is so big. In the first half of 2013 alone, over 35,000 Spanish homes were seized by banks for non-payment, a huge figure in a country of almost 47 million inhabitants. As of this month, 13.7 percent of the country’s housing stock remains empty. With so much vacant property around, pursuing miscreants that sub-let it illegally is a Sisyphean task. It would also take some weeding out, because these "tenants" are heavily outnumbered by squatters re-inhabiting buildings themselves without the involvement of gangs, who are less of a priority. When the authorities do notice, it can still take months to get an eviction notice together. There is so much unused property around and so many hard-pressed people needing cheap housing, that it was arguably only a matter of time until this sort of ruse cropped up.

The question is, how much does it matter? It's hard to cry a river over vacant, repossessed apartments finding new tenants, even if it means a few shady types will cream off a little cash in the process. The repossession axe is falling hard and often in Spain, and many locals don’t hold the banks that are being ripped off in much higher esteem than this new breed of twilight landlord. Still, many people feel it matters a whole lot – including organizations that are often sympathetic to squatters, such as evictee pressure group Plataforma de Afectados por la Hipoteca, which has drawn attention to the phenomenon.

The problems start from the beginning, as many tenants aren't even aware they're signing a shady contract. Furthermore, the quality of the housing is often appalling. While few people want housing to remain empty, the answer can't be herding the desperate into the hands of exploitative shysters.

Most of all, the phenomenon shows the damage Spain's mortgage lenders are doing by not getting their properties back on the market. Cities like Madrid and Barcelona may be feeling the pinch, but they're far from being European Detroits – there is still a demand for housing in many areas.

The police are arresting squat landlords, but their long-term strategy may be to hit property owners harder. Just this week, Barcelona’s mayor Xavier Trias announced fines of up to €500,000 for landlords who keep property vacant in high-demand areas. The San Sebastian region has slapped a 50 percent empty house surcharge on property taxes, while the Andalusia region agreed to introduce fines of €9000 per empty property in October. These moves won’t put all the sub-letter gangs out of action, of course. But by forcing owners to meet the needs of a desperate market, they should help to close the gap they stepped in to fill.

Top image: A scrap dealer walks past a vacant building in downtown Madrid. (Andrea Comas/Reuters)

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