Junta will expropriate people’s homes to save them from the banks

The Junta de Andalucia has signed today into law a rather surprising new law – it has promised that it will expropriate, using “emergency powers”, the home of any family which is about to be repossessed by the banks.

The idea, forced through by the communist wing of the IU, coalition partners in the Andalucian government with the PSOE, is that if you have lost your job and are about to lose the family home to the banks, you can ask the Junta to forcibly expropriate your home before the bank does. The Junta will then take it over for three years “in the national good”, meaning the banks can’t touch it during that period.

Rather cunningly, the Junta has found a way around the need to pay “a fair price” for the expropriated properties. It will “fine” the homeowner the exact amount that it is obliged to pay them in expropriation recompense.  However, up to 25% of this expropriation recompense will have to be paid by the family, over time.

Hey, a button! Do you think it works?

Your home is then used for social housing, which, it seems, means that the family who used to own it can then live there rent free under a benefit plan from the government until they get another job.

Whether the banks will, in three years time, be in a mood to allow you to resume the mortgage payments as if nothing had ever happened seems unlikely. Unicaja, Andalucia’s largest Caja, said today it had serious reservations about the plan.

The same law, the “Decreto-Ley 6/2013, de 9 de abril, de medidas para asegurar el cumplimiento de la Función Social de la Vivienda”, attempts to use the empty housing stock of Andalucia for the social good by forcing large property owners to rent out empty properties as social housing.

The idea is to first create a registrar of empty properties, then force the landlords to rent out their properties, either via private rentals or via the Andalucian Social Housing Fund. Landlords who fail to rent out their properties will face a 9,000€ annual fine per property. Although the Junta denies this will ever be applied to individuals, only companies, the opposition points out that the law just says “any landlord” with an empty property.

The opposition PP party voted against the plan in parliament, saying that it’s daft and will cause financial insecurity for the banks. They added that the Ministry of Housing would be better off addressing the late benefits payments of 230,000 people already enjoying subsidised housing in Andalucia rather that pushing through attention grabbing badly thought out left wing socialist utopia plans.

I’ve said it before and I’ll say it again: introduce a proper personal bankruptcy law (a person can’t declare bankruptcy in Spain, the debts follow you for life) and we’re sorted. If it all goes to pot, let the person wipe the slate clean and start afresh. Not all this “prop them up until they die” nonsense.

It’s far too complicated, won’t work in practise because the banks will overturn it in national court, will cut consumer credit even further and in about four years time the first news stories will be hitting us of the poor people left defenseless because they trusted in this harebrained scheme.

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