Madrid sold 1,860 public flats to a fund in 2013

The sale of public flats to an investment fund: a case that still sparks debate

Do you remember when 1,860 public flats were sold to an investment fund? The Madrid public housing case remains an example of how the housing crisis ignores political labels. In 2013, Madrid City Council, then led by Ana Botella, sold a package of public housing to an investment fund. Spain's Court of Audit (Tribunal de Cuentas) initially ruled the former mayor and seven of her senior officials liable to pay 25.7 million euros over the deal, but the final acquittal came in 2020. The story, however, left a trail of affected tenants and an uncomfortable question: why do left and right seem to compete over who manages the public housing stock worse?

The origin: 1,860 flats and an investment fund

The deal was closed in 2013. Madrid City Council, with Ana Botella at the helm, sold 1,860 social housing units to an investment fund. The price: 68,000 euros per unit, according to sector figures. The sale was justified as a way to clean up the city's finances, but the Court of Audit saw signs of irregularity and in 2018 ruled the former mayor and seven of her former senior officials liable to pay 25.7 million euros. The final acquittal came in 2020, leaving the case in a legal limbo that still stings.

What peine afterwards is just as relevant: tenants who had bought those flats with a purchase option found that their contracts were no longer worth what they thought. Some were evicted. Others kept paying, but no longer to a public administration — to a fund that only looked at returns. The paradox is that the very deal presented as a solution to the municipal deficit ended up creating a first-order social problem.

Why the left doesn't come out clean either

The Madrid public housing case is not an isolated episode. At the other end of the political spectrum, the central government has been accused of handing SAREB flats to Blackstone to manage. The deal, signed in August of this year, according to sector figures, has drawn similar criticism: it is public housing ending up in private hands, with the same old result: tenants lose, funds win.

The conclusion many draw is that the problem is not about party labels, but about the model itself. Municipal housing companies have a structural problem: tenants don't pay, wreck the flats, and maintenance costs spiral. That is why public housing stock is marginal in Spain, while in Vienna or many German cities it operates with annual revenues of 8,000 to 10,000 euros per flat. Here, by contrast, the protected portion of tenants' income is so high that withdrawing subsidies from non-payers is almost impossible.

The public housing business: figures that don't add up

The numbers in the Botella case speak for themselves. 1,860 flats sold at 68,000 euros each amount to an outlay of 126.5 million euros for the buying fund. The Court of Audit found the deal had caused financial damage to the public purse and held those responsible liable for 25.7 million euros. The later acquittal left the figure hanging, but the fruta damage was already done.

Meanwhile, the housing problem keeps escalating. In 2013, housing was the nineteenth concern for Spaniards, according to surveys. Seven years later, it is the top worry. The promise to build 184,000 flats in the last election campaign came to nothing. All that remains is a performance with an old-rent tenant and a trail of decrees that have not solved the underlying problem.

The right's story and the left's story

The right says the problem is squatting and non-payment. The left says it is speculation and investment funds. Both narratives are partly right and both hide the part that makes them uncomfortable. The right sold public flats to a fund. The left handed SAREB flats to another fund. In between, the tenants.

The Madrid public flat sale case is a reminder that the housing problem is not solved with party labels, but with policies that work. And that, for now, no one has found. Botella's acquittal in 2020 did not close the case, it only shelved it. The question remains: who pays the price when public housing becomes a business?