Moody's warns about the ban on evictions exacerbating housing problems!

 

An international rating agency report from Moody's warns that the Spanish government's policies to protect non-payers and eviction squatters will deter investment in housing. qatar villa

Housing is always a sensitive topic, but it's a mining field in Spain today. For the beginning, this was the focus of a political battle between the Left's governmental parties, the hard left pursuing populist policies to invalidate property rights, and the moderate left attempting to strike a balance between ownership rights and the constitutional right to 'dignified housing' for everyone.

The Covid pandemic has worsened the situation and led to new and often changing legislation which undermines the rights of property increasingly. The most recent change protects squatters from expulsion if they are 'vulnerable,' as all can claim. Extortion rackets from squatter mafias are especially good to exploit this condition.

The Moody's international rating agency has noticed this. In a recent memo published by the Spanish press to investors (I couldn't find the original, therefore all quotes are my translations from the media reports), it points out that, in the dry language of an agency ratings, "Although the measures are temporary, in recent times, they have followed a trend towards housing regulations undermining creditors' rights to own property which reflect the incrustations

The tendency towards weaker property rights is clear in Spain and was the subject of a study I mentioned in my paper on Spain's increasing problem of erosion last year. Moody's notes that "giving illegal occupants social rights weakens owners' legal security. These social measures are hard to remedy once granted, and it is increasingly likely that when they expire, most of these measures will be extended or replaced by others."

This is a problem especially for bank repossessions portfolios, which have been taken over by bankrupt developers. "The illegal occupancy of these properties is tending to be high, about 5 percent to 10 percent before the pandemic and now higher with the crisis."

Moody's point that the lack of social housing only aggravates the situation. The new law allows expulsion only if there is a social housing alternative, which is rarely available. Only 2.5% of the Spanish residential stock is publicly owned. Moody notes that regional governments spend only 0.8% of their budget on social housing compared with 40% on health and 20% on education. The new regulations will increase demand for non-existent social housing. Private owners are therefore forced to bear the cost.

The rising squatter risk of extortion

The new regulations banning the expulsion of squatters also encourage the arranged extortion of property owners by gangs using squatters, which is a growing problem. State squatter protection in Spain makes it ruinously expensive for owners to take over their property after the installation of squatters. So if you have a second home in Spain that is left empty for a long time, the risk of squatters becoming home in your property should be minimized by looking carefully at this. In this respect, I have helped to develop an affordable and efficient new solution that uses the latest property monitoring technology to help you. I hope I'll be showing it here next week. Sign up for information below.