Who Are the Vultures? (Alejo Vüdal Quadras in Vozpópuli)

So-called vulture funds are major real estate investors, but in Spain they own less than 10% of the housing stock, according to industry data. The bulk of renting and buying and selling is in the hands of small landlords, and the underlying problem is a shortage of supply in the face of growing demand.

The eviction of **Maricarmen Abascal**, an **87-year-old** woman who had lived for **seventy** years in the same Madrid apartment, has shaken Spanish news more than any other recent eviction. She died shortly after police carried out the court order to leave. The case has become a major issue in the election campaign and has peine the debate over who is to blame for housing becoming a problem for millions of people.

## What vulture funds are and how much weight they carry in the market

The term vulture fund is used for large investment funds that buy real estate assets or debt at bargain prices, often in crisis situations, and then manage them for profit. They have been operating in Spain since the 2008 financial crisis, when they absorbed housing portfolios from the banking restructuring. Their presence is visible in rentals and in the buying and selling of entire buildings, but their actual weight in the overall residential stock is limited.

Large investment funds hold less than **10%** of Spain's housing stock. The rest is in the hands of private owners, many with one or two properties, which they rent out to supplement a pension or to help their children move out of home. That detail dismantles the idea that a few players control the market. Housing in Spain is, above all, a business of small savers.

The confusion between vulture fund and private landlord has consequences. When funds are singled out as the sole culprit, the real driver of the imbalance is left out of the picture: insufficient supply. And people who do not manage thousands of properties, but one or two, are put in the crosshairs.

## Supply is not growing and demand is soaring

Housing prices have risen sharply in recent years for a reason economists keep repeating: supply is not keeping up with demand. Spain's population has grown by **2,900,000** inhabitants over the past eight years, according to figures used in the public debate. That increase is largely explained by immigration, both regular and irregular. More people need more homes.

At the same time, new housing construction has not returned to pre-2008 levels. Material costs, a lack of developable land and administrative slowness are holding back projects. The result is a housing stock growing far below the pace of population growth. When demand rises and supply stands still, prices go up. That is what has peine.

Legislative measures in recent years have moved in the opposite direction from a solution. Laws that cap rent increases, extend eviction timelines or increase tenant protection reduce the appeal of putting a property on the rental market. Less supply, again. The imbalance worsens and prices keep climbing.

## Evictions: 269,000 since June 2018

Since **Pedro Sánchez** arrived at La Moncloa (the Spanish prime minister's residence) after the no-confidence motion debated in Congress on **1 June 2018**, there have been **269,000** evictions in Spain. That is **90** per day on average. The figure comes from the industry itself and has circulated in the public debate, though until the Maricarmen Abascal case it had not triggered a social reaction of this magnitude.

The elderly woman's eviction was carried out in compliance with a court order enforced by the national police. She had previously rejected several solutions offered by the regional and municipal authorities, according to the information made public. The apartment she occupied came from a Franco-era regulation and the eviction was carried out under another law passed by Socialist governments. The political exploitation of the case has been intense on radio, television and front pages.

There is one detail that should not be lost sight of: similar evictions in Catalonia have gone unnoticed. That suggests outrage is not triggered equally across all territories. The selectivity of the scandal says something about who is driving it and to what end.

## Expropriation, banning evictions and the ghost of Venezuela

Part of the left has responded to the problem with proposals that, taken to the extreme, would involve expropriations, bans on evictions and legal changes affecting private property. It is an approach already tried in Venezuela and Cuba, with well-known results: shortages, misery and parallel markets. The prospect of replacing a serious difficulty with a wholesale disaster does not look like a good deal.

The encampments and protests that have sprung up in several Spanish cities demand the impossible while occupying public spaces and harming nearby shops. The comparison with May 1968 has been made in more than one column. The problem is not that people are protesting, but that the diagnosis is wrong and the solutions make worse what they claim to fix.

The German preacher who emigrated to the United States, **W. Boetcker**, left behind ten sayings often quoted in these debates. Three of them fit the case: you cannot help the poor by destroying the rich, you cannot create prosperity by discouraging thrift, and you cannot promote brotherhood by excusing and inciting class hatred. **Abraham Lincoln**, in his acceptance speech for the Republican Senate nomination in Illinois in **1858**, summed it up differently: a house divided against itself cannot stand.

The vultures, if you want to use the metaphor, are not the legitimate owners of real estate assets. They are those who exploit the misfortune of some to stir up resentment against others. Spain's housing problem is real and serious. The solution does not lie in pointing to a false culprit, but in understanding that without more supply, and with rules that do not punish those who save, prices will keep rising. Any decision about buying, renting or eviction should be discussed with a real estate professional or a legal adviser.