A European Commission response, a bank occupation and alternative policies
The occupation of the BBVA branch in Sabadell is going on for the fifth consecutive day. More than 50 representatives of the Platform for the Eviction Victims (PAH- Plataforma de Afectados por la Hipoteca) claim that they won’t be leaving unless they can renegotiate with the bank 11 mortgage cases of people who are about to lose their home due to eviction. This demonstration form clearly signals the escalation of the issue. The wave of evictions that was “born” following the burst of the housing bubble in Spain as in numerous other countries keeps getting out of the control of the authorities both at local and at EU level.
Over 415.000 mortgage execution procedures have been registered in Spain from 2008 to 2012, with the number of evictions reaching 244.000, as PAH estimates. At the same time 3.4 million dwellings remain empty. In Ireland, according to the Central Bank of the country 400.000 mortgages’ holders are in negative equity. The Greek Central Bank estimates that some 500.000 housing loans are being delayed with at least 60.000 of them facing an immediate danger of eviction. CECODHAS Housing Europe had gathered these alarming figures in one of its latest press releases, calling both the EU institutions and the local authorities to follow alternative paths in their policies.
These paths were chartered in a joint letter that was sent out by CECODHAS Housing Europe and the International Union of Tenants (IUT) in the beginning of 2014. The letter addressed to the European Commissioners Barnier, Rehn and Mimica was highlighting the need to protect consumers, to revise the tax policies and to reform the banking sector, while it was suggesting concrete measures to be taken. The initiative that attracted the attention of EU specialised media led to a detailed response by Commissioner Michel Barnier in the end of last week.
The Commissioner responsible for Internal Market and Services acknowledges that “home ownership is not always the most appropriate option for consumers”. Replying to the policy proposals sent to his cabinet, the claims that “the Mortgage Credit Directive (MCD) targets conventional mortgages which make up the majority of the market. ‘Social’ mortgage loans or incentive schemes to facilitate access to a mortgage for the financially less well- off can often be found at national level”, he explains. However, Mr. Barnier hopes that “with the credit worthiness assessment standards that MCD introduces for the first time, it can be ensured that mortgage obligations are manageable and affordable for consumers”, while he believes that “the most effective way of addressing this issue, in the short term, is at national level”.
As far as the Spanish- Aziz- Case is concerned, Michel Barnier shared with CECODHAS Housing Europe that “taking into account the changes in the Spanish rules of civil procedure aimed to give consumers the opportunity to object, to mortgage enforcement proceedings brought against them if they are based on unfair contract terms. Following a wider assessment carried out by the Commission, the Spanish authorities were encouraged at all levels to monitor the implementation of the law on evictions with a view to support financial stability”.
Regarding the constant call to turn unsold housing stock into social rental property, the Commissioner mentions the Spanish Social Housing Scheme (Fondo Social de Vivienda) as an innovative concept to meet the needs of the Spanish market. However, he claims that “there is no suitable approach for all Member States as the situation […] is very different […] and therefore national intervention is better suited”.
In his closing remark, Mr. Barnier expresses his optimism that the modernized Public Procurement rules “will contribute to the implementation of the Europe 2020 strategy for a greener, more social, innovative and inclusive economy”.