Can Europe Make It?

A pensioner’s plight highlights Spain’s housing rights crisis

In the first six months of 2014, banks reclaimed over 26,500 homes. The dream of owning one’s own home has, for many, turned into a nightmare of foreclosures, evictions, and over-indebtedness.

Judith Sunderland
28 November 2014

Madrid 'dignity marches' fill the streets of Madrid. Demotix/Fco Javier Díez Montes. Some rights reserved.

Carmen Martínez Ayuso, who is 85 years old, was evicted from her home of 50 years in Madrid on November 21.  Her eviction provoked outrage, pledges of support by the neighbourhood football club, and scrambling by authorities to save face. 

Her experience is symptomatic of broader impediments to adequate housing in Spain. Since 2008, tens of thousands of people have lost their homes because they were no longer able to pay their mortgages amid the country’s deep economic crisis. In the first six months of 2014, banks reclaimed over 26,500 homes. The dream of owning one’s own home has, for many, turned into a nightmare of foreclosures, evictions, and over-indebtedness.

Faced with concerted pressure from activist groups and negative rulings by the European Union Court of Justice (EUCJ), the central government has taken some steps to address the housing crisis. But Madrid’s actions have been half-hearted, incomplete, and in some cases downright disingenuous. The bottom line is that comparatively few of those in genuine need have benefitted.

Restrictive eligibility criteria mean that a two-year moratorium on evictions for certain families has had limited impact. According to official data from the Ministry of Economy, as of September, 10,000 evictions had been suspended due to the moratorium, which was first adopted in November 2012 and broadened slightly in May 2013. The moratorium has helped only a fraction of the tens of thousands of individuals and families who have been forced from their homes due to mortgage defaults in the same period. The economy minister announced on November 26 that the government would extend the moratorium, due to expire in May 2015, by one year. 

Similarly, the Social Housing Fund, a stock of roughly 6,000 properties provided by banks to give evicted families places to live at affordable rents, has  not lived up to its promise. As of September, only 1,450 families had benefitted. Meanwhile, Madrid’s bankrupt local housing authority has sold over 1,800 low-rent apartments to private investment firms, which has raised rents and led to evictions. 

Government measures to alleviate the debt that families continue to owe even after foreclosure and eviction—a devastating feature of the mortgage crisis in Spain—have also fallen short.  Economy Ministry data demonstrate that as of September, only 6,500 people had been able to restructure their debts with banks under these measures, and only 2,100 had been able to cancel their debt completely upon handing over the property.

People have had more luck negotiating debt cancellation directly with their banks, even when they don’t fit the government’s criteria. Thousands of people have benefitted from this approach, often with the support of groups like the Platform of Mortgage Victims (Plataforma de los Afectados por la Hipoteca, PAH) or mediation services.

An accessible, fair, and efficient mechanism for over-indebted people to discharge their debt is an obvious way to help. The World Bank and other institutions have noted problems with Spain’s personal insolvency laws that trap people in a cycle of debt with no real prospect of a fresh start. Despite successive reforms of Spain’s insolvency law, it remains first and foremost designed to help failed enterprises, rather than good-faith individuals who have fallen on hard times. 

Two rulings by the EUCJ forced the Spanish government to rectify injustices in court proceedings over mortgage defaults. Until reforms in May 2013, courts were not allowed to assess whether a mortgage contract contained unfair clauses, such as exorbitant default interest rates, a situation that the EUCJ ruled in March 2013 is incompatible with European consumer protection laws. But the reform gave only the banks, and not mortgage holders, the right to appeal unfavourable decisions, leading to a second similar EUCJ ruling in July 2014. 

The government often seems more concerned with targeting the grass-roots social activism around the mortgage and housing crisis than dealing with the crisis itself. In 2013, when the PAH organized protests in front of the homes and offices of elected officials to press for reforms, government officials called them everything from terrorists to Nazis. Parliament is now poised to adopt a deeply flawed public security bill that would, among other things, allow authorities to impose fines up to €30,000 on anyone who obstructs public employees enforcing compliance with agreements or administrative or judicial resolutions  -- as long as the obstruction does not constitute a crime, in which case prosecution would ensue). This appears tailor-made to suppress mobilizations against evictions.

The pictures of Carmen Martínez in tears over her eviction have moved many in Spain and beyond, and the solidarity shown her is inspiring. But as a PAH activist from her neighbourhood said:  “There are many Carmens. There’s one in every neighbourhood.” 

Ultimately, it is the Spanish government’s responsibility to ensure the right to adequate housing. This means more robust measures to protect more people against eviction, provide affordable housing and ensure access to effective remedies and redress. It also means creating a fair, accessible personal insolvency procedure to help prevent over-indebtedness in Spain from impeding people’s enjoyment of their basic economic and social rights. 

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