Goldman Sachs is my landlord

The sale of state-owned homes to private firms has left hundreds of families facing eviction

Vanesa Fernández and her son’s low-rent apartment in Madrid’s Vallecas district now belongs to investment bank Goldman Sachs.
Vanesa Fernández and her son’s low-rent apartment in Madrid’s Vallecas district now belongs to investment bank Goldman Sachs.JULIÁN ROJAS

Vanesa Fernández used to live in an apartment owned by the state; now her landlord is Goldman Sachs, the multinational investment bank that made a fortune out of the collapse of the subprime mortgage bond collapse in 2007. The former took a more understanding approach to the unemployed single mother’s circumstances by reducing her rent when she ran into financial difficulties. For the moment, the new owner of her home has respected her rental agreement, but is applying it to the letter, which is why Fernández might soon find herself on the street.

A decade ago, when Spain was in the middle of a property boom, city councils were buying land at inflated prices and setting some of it aside for low-rent and subsidized properties such as the apartment block in which Fernández, 35, currently lives. Now, the same local councils, required by the Economy Ministry to turn a profit, are selling off their housing stock to investment funds such as Goldman Sachs.

The apartment has just one bedroom, so Fernández sleeps in the same bed as her eight-year-old son

Fernández had to wait seven years to be given her 43-square-meter, low-rent apartment in Madrid’s working-class Vallecas district by IVIMA, the regional housing authority, which she moved into in 2012. The apartment has just one bedroom, meaning that Fernández sleeps in the same bed as her eight-year-old son. She was initially paying €409 in rent a month, but shortly after moving in, she lost her job as a cleaner. After informing the regional government of her situation, her rent was reduced to €81 a month for two years, a period that could be extended, depending on her circumstances.

But in October 2013, her property, along with the other apartments in her block, was sold to Encasa Cibeles, a real estate company that runs two investment funds, one for Goldman Sachs, and one for Spanish business Lazora, which specializes in purchasing low-rent state housing. The pension funds of Telefónica and BBVA are among its investors.

In total, 2,953 properties owned by IVIMA, along with 1,860 properties owned by Madrid City Hall and 298 by Barcelona City Hall, have so far been sold to investment funds and property developers. Madrid City Hall’s EMVS housing department has a shortfall of €25.8 million, and plans to sell more of its subsidized housing stock to meet the Economy Ministry’s stringent demands that it turn a profit. The new owners will be obliged to respect their tenants’ contracts with City Hall. The problem for the tenants is that those contracts contained clauses that were usually applied with some latitude by City Hall, depending on their circumstances.

Goldman Sachs has respected her rental agreement, but is applying it to the letter

Vanesa Fernández has already been told that she will soon have to return to paying the €409 a month stipulated in her contract (€300 a month for the apartment, and €109 for a space in the parking garage, which she doesn’t use, but cannot sublet). But of course, she cannot pay that sum. She receives €150 in alimony from her former partner, along with €338 from the state. Sometimes she earns €100 a month doing cleaning work. When she told Encasa Cibeles that she would need to renew her rent reduction, she was told that as she no longer lived in a property owned by the regional government, she, and 500 other people in similar circumstances, would no longer be entitled to do so. “When I can’t pay the rent, will I be evicted?” she asks. She has fitted an extra lock to her door, fearing that the property will be seized.

Enrique Villalobos, a representative of a residents’ association in Vallecas, says that people with no income living in low-rent accommodation have discovered other problems now that their homes have been sold to private property firms. “Although the rental agreement stated tenants had to pay the municipal property tax, the Madrid regional government never charged them. But Encasa Cibeles has now begun charging the tax. Furthermore, the company has increased the building maintenance fees by 15 percent.” Villalobos says that many residents had a right-to-buy option in their contracts, and have since discovered that Encasa Cibeles has set the highest possible market rate for the properties, substantially higher than the regional government’s estimate of their value.

People on low incomes living in reduced-rent properties sold on by Madrid City Hall are also facing difficulties. In Carabanchel, in the western outskirts of the capital, around a third of residents who thought they had a right to buy their property are now discovering that City Hall’s housing department ceded that right during the negotiations with the new owners, Blackstone and Magic Real Estate, and that the properties will remain rental only. Many residents point out that they had already invested money in improving their homes, and that they were not informed of the changed situation.

Madrid’s authority plans to sell more of its housing stock to meet government demands that it turn a profit

Miguel Oñate of Magic Real Estate says the company will respect previous rental agreements, adding that discounts of up to 25 percent will be offered to people in receipt of housing subsidies and that it will negotiate with those unable to pay their rent. Three hundred residents were not paying their rent; that figure now stands at 50. Fifteen properties are being squatted in, and there are four evictions pending, one of which will go through; the other three have been halted while the local council finds the occupants alternative accommodation.

Mari, a 51-year-old with an unemployed husband and daughter unable to work due to illness, is one of those three waiting to be moved to new accommodation. In 2012, three years after her husband lost his job, the family was no longer able to cover the €1,000 living costs. Mari suffers from diabetes and glaucoma, and is unable to work. She says she accepts that she is being evicted for non-payment of rent, but that she has not had her rent of €420 reduced in light of her economic situation, or been moved to a smaller property, as she had asked. “I have been here since 2006. Nobody has given us anything. I have photos of me with the housing director when we moved in,” she says.

She learned in December that she was being taken to court, and so decided to talk to Magic Real Estate. “They asked us where we were from, suggesting that we move to Burgos, where properties are cheaper,” she says.

In Barcelona, Azora Gestión, the parent company of Lazora, now owns 298 low-rent apartments it bought from City Hall. Josep Ortiz, of a local residents’ association, explains that while rents have not been increased, property maintenance fees have risen by 50 percent and tenants are obliged to pay for parking spaces they do not use. “People are worried that speculators are not offering any guarantees that they will maintain these low-rent properties,” he says.

Encasa Cibeles has increased building maintenance fees by 15 percent” Enrique Villalobos – Vallecas residents’ association

Back in Madrid, growing numbers of people living in properties formerly owned by the regional housing department are receiving eviction notices. The Regional Federation of Residents’ Associations passes the cases on to the regional government, says Enrique Villalobos. “It is obliged to look into each case. For the moment, we are managing to prevent evictions being carried out. Some people work out a payment plan, while others are being told they must move to neighborhoods or areas they do not want to go to.” The regional housing authority insists that it is acting as a “mediator” to prevent evictions.

Encasa Cibeles has declined to answer EL PAÍS’s questions, but says in a written reply: “The company is making a significant effort to offer solutions to those who need them, in collaboration with social workers and local administrations.”

Spain’s Ombudsman has called on Madrid’s regional housing authority to provide more information, pointing out that residents should have been consulted about the sale of their homes. In the meantime, residents’ associations are working with the Socialist Party to present a joint complaint against the head of the regional housing authority, Ana Gomendia, accusing her of selling state housing at bargain basement prices, as well as abuse of her authority and embezzlement. They have hired Liria, the same law firm that prevented the regional government’s privatization plans for the capital’s hospitals. They hope to be able to pay the law firm’s €30,000 fee via crowdfunding. “It may even be possible to annul the sale of these properties if a judge believes there have been irregularities,” says Liria’s Juan Carlos Antón.

Lazora now owns more than 8,400 low-rent homes in 13 cities throughout Spain. Many of its tenants cannot pay their rent. Carmen is one such tenant, living in Zaragoza. She has not been able to pay her €447 rent for three months. “The rent is too high; we should not be paying community fees or property tax. When we have a problem, the office here in Zaragoza tells us that they will talk to Madrid.”

Loli Cuenca, who lives in Alicante, says that when she ran into financial difficulties following the death of her father, and was unable to pay her rent for three months, she was unable to contact Lazora to discuss payment terms. “They refused to talk. They just ended the conversation,” she says, adding that the company then sent an eviction notice.

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