Foreclosed City

The Spanish real estate sector has wreaked havoc on homeowners. Since the property bubble burst in 2008, hundreds of thousands have been forced from their homes—their debts often intact even after eviction.

The impact on society is hard to underestimate: In 2013, Spain averaged 184 evictions a day. Amid this devastation, one isolated Barcelona neighborhood, Ciutat Meridiana, stands out as the hardest hit. With about 20 percent of its apartments involved in eviction proceedings, Ciutat Meridiana earned the unwanted title for “the most foreclosed community in Spain,” according to The Neighbors Associations of Ciutat Meridiana.

This ongoing economic disaster in Spain has deep historical and legal roots. As early as the 1950s, we see the modern figure of the liberal, self-possessive individual re-deployed in the context of home ownership. As sociologists Isidro Lopez and Emmanuel Rodriguéz noted, Spanish dictator Francisco Franco’s Minister for Housing José Luis Arrese stated in 1957: “We want a country of proprietors, not proletarians.”

For decades, authorities intentionally degraded renting and privileged ownership. Successive governments, the banks, financial experts, and the real estate sector transformed mortgages “into a status symbol, a euphemism for professional success which signified the passage into adulthood. Rent, however, was a symptom of failure and inferiority,” as two housing activists, Ada Coulau and Adria Alemany, explained in their book Mortgaged Lives.

The Spanish government supported the real estate sector as the primary engine of economic growth and propped it up through financial and environmental de-regulation, which in turn fueled land speculation. This radically changed the proportion of homeowners to renters. It is in this context that approximately a million Spanish subprime mortgages were offered to society’s most vulnerable groups between 2003 and 2007.

A Toxic Situation

Even with the privileging of owning over renting, activists point out that the right to housing is enshrined in Article 47 of the Spanish Constitution. Article 47 provides that “all Spaniards have the right to enjoy decent and adequate housing…” The Article places a positive duty on the government to make this right effective and to “prevent speculation.” Article 33 is also relevant, stipulating that private property be limited by the social function of property. Despite these constitutional guarantees, Article 47 has been hollowed out by mortgage laws, the deregulation of credit and lending, and the unrestrained bolstering of real estate development.

Perhaps the most anomalous aspect of Spanish mortgage law is that when there is a default and the bank repossesses the mortgaged property, the debt is not discharged, as it is in most jurisdictions. In Spain, dación en pago (literally “handing back the keys” to the lender to discharge the debt) does exist in the mortgage legislation, but it is optional. Banks have only applied it when forced to by people lobbying them en masse.

The intersection of the rapid deflation of housing prices occasioned by the financial crisis and the practice of appending the mortgage debt onto the person rather than the property has created a toxic situation.

When a house goes up for auction in the current climate, the auction is unsuccessful in 90 percent of cases. Over the last several years, the bank would revalue the home at about 50 to 60 percent of the value of the property when the mortgage was taken out. This de-valuing of the property at the time of repossession means that, at most, 60 percent of the debt is discharged.

Property prices experienced levels of over-valuation that have severely affected the levels of debt owed by mortgagors. The IMF and OECD have both stated as early as 2004 that “the housing market was being overvalued at between 30 and 40 percent” and thus the value of property, and the debt owed, was severely inflated to begin with.

Additionally, there are few places for the displaced to legally go; public housing accounts for only about 1 percent of total units. Meanwhile, in the fall of 2011, there was a surplus of 6 million homes that were empty and unoccupied.

In this photo series shot over five years, Guillaume Darribau documents the grass-roots movements fighting these foreclosures. Collective action has enabled people facing eviction to avoid the alienating effects of debt by dealing with intense feelings of guilt and powerlessness together. In Ciutat Meridiana, neighbors have supported each other, sometimes even barricading themselves in the entrances of buildings, to prevent evictions in their community. Across the country, hundreds of local indignados groups have successfully stopped thousands of evictions from taking place. The struggle for fair and adequate housing and to reform the punitive mortgage laws remain at the forefront of a changing political landscape in Spain.

Brenna Bhandar is a senior lecturer in the School of Law at SOAS, University of London.