As anger boiled over in Spain about the death of Maricarmen Abascal two weeks after the 87-year-old pensioner was evicted from her Madrid home, Prime Minister Pedro Sanchez had no doubt who was to blame for the mounting housing crisis.
Emergency housing legislation passed after he dissolved parliament and called a snap election for Nov 29 would “stand up to vulture funds,” Sanchez said on Oct 6, adding that the measures would “target only those who regard housing as just another commodity to be speculated on.”
With rents rising 44 percent and house prices 58 percent over five years, protesters clamoured for a halt to speculation by so-called “fondos buitre” (vulture funds) that many blame for a raft of evictions such as Abascal's.
But many in Spain are struggling to pin down exactly who these supposed predators are.
In the case of Abascal's eviction, her landlord was not a big-name private equity firm but rather a small consultancy called Urbagestión. Owned by two brothers, it has eight staff, a net profit of 2,990 euros ($3,350) last year and two properties to its name, according to the Association of Spanish Registrars.
After buying Abascal's apartment eight years ago, Urbagestión increased her monthly rent to 1,650 euros from 570 euros, more than her monthly pension, according to the tenants' union that represented her. The company took Abascal to court after discovering that her regulated rent contract had expired, court documents show.
“Urbagestión may not have been a ‘fund,’ but it is a ‘vulture SME (Small and Medium-sized Enterprise),’” Housing Minister Isabel Rodríguez said.
Widening The Net
Vulture funds first entered the Spanish lexicon after the 2008-2014 financial crisis to describe private equity funds or investment banks that bought rent-controlled flats and jacked up rents.
But companies including investment funds account for just 8 percent of Spain's rental market, according to the Bank of Spain. The government has now widened the net to include anyone that makes a profit in the market, enmeshing small landlords who make up the majority of Spain's rental market, said Fernando Rodriguez de Acuña, general director of Madrid-based real estate analysis firm Acuña.
“It's only natural that anyone should make a profit in the market. Otherwise, you wouldn't get involved in the first place,” he said.
The government first attempted to define and regulate vulture funds in a 2023 housing law that limited the activities of “large holders” – people or companies who own 10 or more properties.
In the decrees issued this month, the parameters were tweaked so that those who own five or more properties in areas deemed to have housing shortages must also be included. They are now banned from buying property for less than 70 percent of its market value.
The legislation goes further by banning owners of more than two properties from evicting tenants until 2030, while all landlords will be subject to automatic contract extensions and rent freezes.
Eviction Surge
The increasingly nebulous definition of a vulture fund last week ensnared Montse Minguez, a parliamentary spokesperson in the Socialist party, who stepped down after Spanish website Articulo 14 reported that her husband owned a property company that rented out 30 apartments and had evicted several tenants.
When Antena 3 asked her why Urbagestión was considered predatory and her husband's company was not, she said it was a family company that abided by the law and paid its taxes while vulture funds were “foreign money that buys up entire blocks of flats to drive people out of their neighbourhoods to turn them into holiday lets.”
“All we're saying is that you can't go for the jugular, nor can you turn to speculation or vulture funds,” she said.
Spain has seen a surge in evictions since March when a pandemic-era law to protect vulnerable tenants expired.
Orders for about 70,000 evictions were reinstated after the law was not extended, according to the Tenants Union.
Olga Matute took her own life on Sept 7 after she was evicted in April. Her case had been pending since 2020 after a bank sold her apartment to a fund which would not accept a reduced rent.
The new measures give protection to nearly 5 million people, including 122,683 at risk of eviction, social groups including the Tenants Union said in a statement.
Small Investors Unsettled
The decrees “are still a long way from what is needed, but they represent victories in guaranteeing the right to housing,” said Enric Aragonès, a spokesperson for the Catalonia Tenants' Union.
But the measures will only serve to exacerbate the shortage of rental homes in the long term, said Jorge Galindo, director of Esade Center for Economic Policy (EsadeEcPo). “These are policies that protect those who have a rental at the expense of those who don't yet have one,” said Galindo.
The National Federation of Estate Agents' Associations (FAI) said some 600 estate agents had reported the withdrawal of some 2,067 properties for long-term let in the days after the decree. A further 1,523 letting agreements have been put on hold.
Nearly half of Spain's housing rental stock is owned by single-property landlords, while large landlords account for just 3.6 percent of the market in the hands of individuals, according to EsadeEcPo research.
Foreign private equity has been cutting its exposure to residential real estate in Spain for some time. Blackstone has reduced its portfolio of residential properties in Spain to 12,000 from a peak of 40,000 in 2017.
Funds are investing instead in projects such as student housing and shared, short-term rents often inclusive of amenities like gym membership known as flexible living, which are not governed by the same regulations.
More than 40 percent of the nearly 24,000 Spanish homes bought by investment firms over the past 12 months were student flats, according to MSCI data company.
CPP and Greystar, two of the top four cross-border investors in Spanish homes over the past two years, said their investments were entirely or mostly in student housing and flexible living.
“The fact is that the market isn't controlled by large funds; it's in the hands of small investors. So now it's all the small investors who have to bear the entire burden,” Rodriguez de Acuña said.