Feargus O'Sullivan is a contributing writer to CityLab, covering Europe. His writing focuses on housing, gentrification and social change, infrastructure, urban policy, and national cultures. He has previously contributed to The Guardian, The Times, The Financial Times, and Next City, among other publications.
The massive fines levied against the investment funds have been interpreted as a “declaration of war” from Mayor Ada Colau, who wants more affordable housing.
For some years now, Barcelona has been making a threat to landlords: If you don’t find tenants for your empty buildings, we will fine you.
The tone emerged as the city’s affordable housing crisis deepened, exacerbated in part by the fact that some buildings lie vacant even as housing has become more scarce. This month, however, the city has gone further than ever before to act on its threat, levying fines of €2.8 million ($3.17 million) against two investment funds that each own an unoccupied building in Barcelona’s center.
The fines go far beyond what’s previously been levied against landlords, and they’re large enough to be what local media has deemed a “declaration of war” from Mayor Ada Colau. That’s perhaps fair, given that the mayor has referred to the owners of such properties as “vulture funds.”
The city’s mission, however, is constructive as well as punitive. It has pumped funds into ensuring that other previously empty homes are converted into affordable housing, and an initiative this month promises to make another 426 formerly empty properties available for social rent. The result could be, if not a war, then certainly a systematic attempt to ensure that its housing market and its neighborhoods work better.
The problems the fines are intended to combat began in 2007, when the financial crisis brought an epidemic of foreclosures on homes across Spain. After a nationwide wave of repossessions, banks found themselves the owners of newly vast portfolios of housing whose tenants had been evicted. Put off by the cost of renovations and wary of their potential obligations to rental tenants as landlords, many banks simply left their buildings empty, waiting for the market to bounce back so they could sell them at a higher price, or seeking permission for non-residential uses such as hotels.
This approach has been counter-productive, to say the least. Recently there has been a crime wave across Barcelona that is partly powered by buildings being left empty. As repossessed homes have been left without permanent paying tenants, some have degenerated into Narcopisos—“narco-apartments”—which gangs use for the sale and consumption of opioids. This has caused some central areas to become somewhat rundown and unsafe, even as pressure from the tourist industry has made rents in other areas, sometimes right next door, ever higher.
Combating this problem is something of a personal mission for the city’s current administration. Mayor Ada Colau’s first public platform was not as an elected politician but as an anti-eviction campaigner, fighting local laws that were especially punitive by international standards to people who had fallen behind on loan repayments. The law the city is using, which gives it scope to fine negligent landlords after two years of leaving a property vacant, has in fact been in place since 2007 (before Colau’s election) but wasn’t implemented until during her tenure. Since then, the scale of fines demanded has been rising dramatically. In 2015, fines of several banks for leaving 12 homes empty were a now modest-sounding €60,000 ($68,000). By 2016, fines on banks of up to €315,000 ($356,000) were being imposed. This January, the city announced a further 14 cases, with the most serious facing fines of up to €900,000.
The latest fines—for two multi-unit properties in the city’s fairly well-heeled Eixample district—are still so much higher than anything previously demanded that they’re arguably of a different magnitude altogether. They suggest an impatience on the city’s part with un-cooperative landlords that previous milder penalties have failed to fully curb, but despite their severity are not necessarily intended to be collected. The intention instead seems to be to force the investment funds that own them into action.
If the owners agree to allow their empty properties to be rented at affordable rents, the mayor has suggested that the city would be prepared to reduce, or possibly even remove the fines. This certainly seems like a feasible outcome. Even as housing rented out at a fixed, affordable rate, the properties would generate revenue for their owners. It still remains to be seen how the funds that own the buildings will respond to the fines, and whether they succeed in encouraging other landlords to turn their empty properties to more socially constructive use. At the very least, they will highlight the fact that the conditions that encourage major investors to leave badly needed homes empty are neither sustainable nor entirely rational.