A street in Barcelona's Old Town District, where one of the apartments due for city takeover is located. Albert Gea/Reuters

To address a housing shortage, Spain’s second city says bank-owned properties can no longer sit empty.

Don’t let an apartment you own sit empty, or the city may turn it into affordable housing for someone else. That’s the message this month from Barcelona, as it revives a controversial policy to force banks to do something with properties they’ve repossessed.

Indeed, Barcelona has announced that it will appropriate five empty bank-owned properties that have been unoccupied for more than two years. That’s potentially just the start of it—there are more than 2,000 unoccupied homes across the city, much of it still fallout from the 2007 financial crisis.

The homes will, pending appeal, be overseen by the city for between four and 10 years as medium-term residences for people on the public housing list. While the current list contains just five addresses, the city estimates that up to 600 empty apartments in areas of high demand could ultimately be pressed into public service using the law, helping to ease Barcelona’s affordable housing shortage.

As test cases, these actions could pressure financial institutions to release their properties into the rental sector—something they can be reluctant to do because, unwilling to set themselves up as landlords, they hold out hopes of selling them properties outright. As you might expect, a policy that forces the banks’ hands has already proved controversial, not just within the city, but nationally.

The plan is not, in fact, entirely new. It was first voted through by Catalan regional politicians in December 2016. Since the law’s first adoption, appropriation proceedings have been initiated for 16 homes. After much wrangling, though, the law was put on hold last October following a legal challenge from Prime Minister Mariano Rajoy’s Spanish national government, which suggested it might breach the constitution. The final rejection of this legal challenge means that the appropriations can resume—and indeed, likely gather speed and scope.

The policy works like this. When the city identifies an empty property in an area of high demand, it is allowed to issue an expropriation order that would transfer control to the city. This order can be put off only if the bank finds a tenant for the building—paying an affordable, city-adjudicated social rent—within three months, with the banks being given a 14-day period to appeal the decision. Once handed over, the property needs to stay within the socially rented sector for four to seven years. Banks found to be concealing empty properties for the purpose of avoiding the edict are liable for a small fine—Bankia, Spain’s fourth largest bank, has already incurred a fine of €7,200.

Given the small number of properties involved—at least initially—the targeting of banks in this way might seem tokenistic. Barcelona’s measures are nonetheless part of a broader general assault on a specific problem that many cities face—where to house people waiting for public housing while new units planned for them are still under construction. By the end of the term of current mayor Ada Colau, in May 2019, the city should have completed or started construction of 4,000 of such units. People waiting for homes right now, however still need somewhere to live.

The plan could help find medium-term homes for people on the waiting list, as could a pilot scheme to build 92 sustainable temporary homes in high-demand areas this year. Neither plan is necessarily about creating a permanent new pool of affordable housing. What they do push for, however, is an understanding that no building or plot of land in an area of need has the automatic right to rest empty when people badly need homes.

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