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Spain’s Housing Crisis

Spain’s Housing CrisisIn October 2021, government officials in Spain made it their primary mission to combat the ever-increasing rent prices across the country. Governmental officials are tackling this issue by increasing rent-control efforts nationwide. This goal will impact the number of private equity landlords operating in Spain and address Spain’s housing crisis.

What are Private Equity Companies and Landlords?

Private equity companies, more commonly referred to as private equity firms (PEFs), are designed strictly for investment management. PEFs are companies investing in other companies. PEFs strictly buy and sell stocks in private companies on other private corporations’ behalfs to generate income and revenue from the sales of stocks. PEF investments are not made in the public market, but rather, in private firms to potentially increase the amount of money made as a return on investment.

Private equity landlords are corporate landlords that PEFs invest in. This places additional pressure on landlords to make a profit and increase returns for PEFs. Therefore, on top of the money earned in rental prices and the fees incurred through home management as part of rentals, there is a cycle of continuously increasing rents to make more money for PEFs.

Housing Crisis in Spain

Spain’s housing crisis has been an issue since the beginning of the COVID-19 pandemic. The changes it has undergone include drastic rent hikes and lack of home availability in certain regions. The main reason is that many did not feel safe living in congested cities and have attempted to vacate the cities and buy or find home rentals elsewhere.

Spanish citizens have struggled to find affordable housing in a nation with 21% of the population at risk of poverty as of 2020. Furthermore, roughly 7% of Spanish families live in severe poverty, according to El Pais.

To top everything off, the hike in rental prices averages 50% over five years. However, prices exceeded a 60% jump between 2014-2017 in Madrid and Barcelona. Comparatively, wages in Spain have increased by 1.6% on average. This is driving income inequality and presenting challenges in affording and maintaining rental housing. Housing in Spain has become a burden for many due to the influence of private equity companies on rental prices.

During the pandemic, with the lack of growth in wages nationwide and increased hikes in rental costs, Spanish law mandated that no evictions could take place. Nevertheless, in some areas, such as Ciutat Mediriana, evictions continued. Spain’s housing crisis left people on the street with no way to access affordable housing.

Private Equity Landlords in Spain

Blackstone, a PEF based in the United States, has investments in 30,000 homes across Spain. Blackstone opened housing rental investment opportunities in Spain in 2013. It has not slowed its increases in Spanish housing rental prices since. The return on investments for Blackstone in Spain hit all-time highs for the PEF as it has increased rent prices year after year. The significant returns for Blackstone due to the increased rent prices are costing individuals more than 30% of their income.

Spain’s housing crisis does not have an overnight solution. However, the bill that Spain’s left-leaning officials proposed could fix the problem to some extent. According to Euronews, if Spain implements the bill, it will place rental price caps on any rental company with more than 10 rental homes, effectively strengthening rent control.

About Rent Control

Rent control boosts the economy because it diversifies investments in the public and private sectors. Spain’s housing crisis leaves little opportunity for spending money outside of rental affordability. This leaves other economic sectors falling behind and losing strength over time.

Rent control helps individuals living in lower-income situations keep their housing for longer and more secure periods of time. Landlords are also guaranteed filled buildings when rent prices do not increase and overburden their tenants. Rent control reduces homelessness and evictions, consequently keeping people in their homes and effectively reducing poverty rates.

The bill that the Spanish government proposed to cap rent price increases also benefits the landlords through reduced taxation, giving them the incentive to support the rental caps. This bill could mean diversification of businesses and enhanced opportunities for localized businesses or landlords to combat the PEFs and boost the local economy.

The PEFs in Spain drove rental prices beyond easy affordability for many. Spain’s housing crisis is out of control as a result. This bill could reduce homelessness and poverty. It could boost the economy through localized diversification of business and investments and give Spanish citizens chances to find new homes.

– Clara Mulvihill
Photo: Flickr

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Examining Poverty in Scotland

 Poverty in Scotland
At only 19% or roughly 1 million people, Scotland has the second-lowest rate of poverty in the U.K. with only Northern Ireland beating it. What has kept poverty in Scotland lower than in other parts of the U.K.? Moreover, how can the rest of the U.K. learn from it?

Scotland Compared to the Rest of the UK

Scotland’s poverty rate has decreased from 23% in the 1980s to 18% in the mid to early 2000s. The entire United Kingdom sits at a 22% poverty rate and Wales has a 23% rate, while London has the highest rate of poverty of any area in the U.K. In comparison, Scotland has a poverty rate that is 3% lower. Poverty amongst youth is 6% lower in Scotland in comparison to the rest of the U.K., though poverty in Scotland has increased in youth by 3% in the past five years.

Scotland is lower in poverty in comparison to the rest of the U.K. but it is something that could change rather quickly. In February 2020, Scotland pushed for a new budget plan in order to increase the quality of life. The budget included £1.8 billion to help reduce emissions and push for better eco-friendly travel. The budget also set aside £15 billion for health care services, £117 million for mental health support and £180 million to close the attainment gap in schools.

Poverty Levels and Housing

The U.K. has a private renting sector, a larger sector of housing that is a primary source of housing for lower-income households. This housing is under private ownership and has seen a steady increase in cost since 2002. Private renting allows for the owners of said properties to continuously raise prices, putting a strain on lower-income households.

Scotland has not fallen into this trend, providing more social housing instead. Social housing is a form of housing that the government, state or nonprofits regulate to make sure rates stay at an affordable level and to help keep people off the streets.

Social housing allows lower-income households to maintain their homes, without fearing the strain of rent increases. It also allows people to keep themselves out of poverty while they receive support from the government.

In comparison to the rest of the U.K., more lower-income households in Scotland live in social housing than other parts of the U.K. Unfortunately, 45% of households in Scotland live in unfit dwellings, which could be due to household budget restraints.

Scotland has just passed a plan to ensure that all houses provide safe, warm and accessible places to live. The plan will ensure that all houses, whether rented or not, fit a national standard by 2040. This standard will ensure that regardless of how much the place costs, it will offer the same level of comfort and accessibility as other types of housing.

Unemployment and Wages in Scotland

Unemployment has steadily decreased across Scotland in the past 20 years. Additionally, Scotland has seen fewer layoffs while better work compensation has helped people stayed employed.

The U.K. increased wages by 20p in 2020 to £9.50 across the U.K. Scotland, in partnership with Real Living, is working with Scotland’s top employers, Brewdog, SSE and Standard Life Aberdeen to ensure living wages and benefits are in order and to keep those at risk out of poverty above the poverty line. The year 2020 saw an additional £240 million thanks to the partnership with Living Wages to ensure that those in need continue to get benefits as the COVID-19 outbreak continues.

Scotland, while not perfect, is a good example of ways that one’s government can help people get out and stay out of poverty. This kind of support from the government is not necessarily going to erase poverty, but it is pushing in the right direction.

– Claire Olmstead
Photo: Flickr

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The Inherited Burden: Combating Homelessness in Guyana

The Inherited Burden, Combating Homelessness in GuyanaIn 2015, David Granger became the president of Guyana, the Caribbean country located in mainland South America. He defeated then-incumbent President Donald Ramotar, whose party, the People’s Progressive Party, stood in power for 23 years. Granger inherited the bane in his predecessor’s side: homelessness in Guyana.

The Housing Crisis in Guyana

Guyana has many informal settlements, such as Tiger Bay. The government is having a difficult time handling the housing crisis. In 2016, 52 families lived in Tiger Bay, located in the center of Georgetown, Guyana’s capital. Ramotar administration’s failed solution to the housing deficit was to give plots of land to those who could not afford it, thus forcing them into crippling debt. This is akin to winning a free car and being unable to keep the prize because the taxes are too much. Only 55% of those plots are now occupied. If the issued land plots did not begin construction within a designated timeframe, the land reverted to the government, but the debt that came with renovating the land remained with the citizens.

Many of those land plots are on former plantations with water-logged soil and sparse infrastructure. The government prioritized low-income families and state employees in their housing schemes. One scheme involved turnkey apartments, which are apartments that are already remodeled and ready for rental. A study from the Inter-American Development Bank in 2016 estimated that the country had a deficit of 20,000 homes for low-income families and 52,000 properties in need of repairs. The housing situation has also led to citizens of Tiger Bay adopting unhygienic practices because of a lack of proper plumbing.

President Granger and Homelessness in Guyana

On June 1, 2019, seven months after he lost a vote of no confidence, President Granger vowed to combat homelessness in Guyana. He said he would, “like to leave the office when there is not a single homeless Guyanese… every Guyanese will have a roof over his or her head.” President Granger based his vow against homelessness on the Guyanese constitution. The constitution states that “every citizen has the right to proper housing accommodation.” The president stated his new idea will not connect to his predecessor’s attempts to fix homelessness in Guyana.

In February 2020, former President Granger addressed the country and announced himself as “the man with the plan” to save Guyana. One of the problems Granger plans to fix is housing. To that end, the president announced the National Squatter Regularisation Commission (NSRC). The NSRC will use funds from the National Treasury to eliminate squatting and homelessness in Guyana.

In 2017, the Central Housing & Planning Authority (CH&PA) allocated approximately $43 million to have 72 houses built for squatters. The CH&PA stated that some of the squatting areas would become regulated and develop into proper housing schemes, while others, like Plastic City, will be relocated. Plastic City is among the 173 settlements the government targets. In the first half of 2019, the CH&PA supplied 541 houses, which was 54.1% of the target for 2019.

Guyana’s 8 Goals to Combat Homelessness

In 2015, the country gave itself eight goals to accomplish by 2020:

  1. Finish infrastructure before allocating the lots.
  2. Begin construction of the homes.
  3. Promote partnership between the private and the sectors to simplify the provisions of social infrastructure and community services.
  4. Foster community involvement to identify and implement community projects.
  5. Coordinate projects with the collaboration of governmental and non-governmental organizations.
  6. Integrate developmental planning.
  7. Regulate and contain squatters.
  8. Complete the divestment of land.

The Progress of Eliminating Homelessness in Guyana

From 1998 to 2007, the government ran the Low-Income (LIS) to increase ownership of land and housing that have valid equity not tied to the government. It wanted to put equity in the hands of the people. Once the program ended, the Guyanese government received a loan of $27.9 million for a second version of the LIS. This incarnation of the LIS was focused on improving the qualities of impoverished families by granting them access to housing. That program ended in 2015. Subsequently, the CH&PA acquired another $3.1 million for the Hinterland Housing Project, a spin-off of the second LIS.

On February 28, 2020, the CH&PA handed 43 houses to the people of Sand Creek Village. The houses were built as part of the Hinterland Project. Of the $3.1 million granted to the Hinterland Project, approximately $311,358 was assigned to the Sand Creek Village.

In Guyana, the homeless population faces stigma and is looked down upon by fellow countrymen. Citizens see the homeless population as people who have “failed” because of personal choices and not because they are victims of socio-economic failings that they have little to no control over. As a result, many homeless people suffer from poor mental health.

In March 2019, humanitarian organizations focused their efforts on Georgetown. The Raising and Extending Arms to Care and Help (REACH) and Potluck teamed up with local volunteering physicians and donors to assist Georgetown’s homeless population. The vulnerable population received new clothes, assistance in baths and new haircuts. In 2018, the organization reached out to 100 people to raise $100,000 for “society’s forgotten citizens.” Additionally, the Potluck NGO assisted the Guyanese homeless population by providing blood pressure and blood sugar testing and giving out over-the-counter medications.

– Pedro Vega
 Photo: Flickr

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Torch Tile Addresses Housing for Morian Refugees

University of Southern California (USC) has a course called “Innovation In Engineering and Design for Global Crises.” As part of the class, a team of USC undergraduates visited the Moria refugee camp to learn from and engage with the displaced peoples about their experiences. The need for more livable housing was the impetus for students’ project development. The result was Torch Tile — an adaptable, low-cost, user-friendly solution to the sheltering challenges of the displaced peoples in Moria.

Living Conditions of the Sprawling Moria Refugee Camp

On the eastern coast of the Greek island of Lesvos, is the Moria refugee camp. Moria is the largest refugee camp in Europe. It is the landing pad for the daily stream of refugees fleeing from Afghanistan, Syria and Turkey via a harrowing boat trip across a six-mile stretch of the Mediterranean Sea. The camp was originally designed to shelter 3,000 people. Currently, it is overflowing with over 13,000 refugees.

Tents sprawling the foothills surrounding Moria have constituted as impermanent shelters or “homes” for these refugees. Some asylum-seekers have even established residence with flowers, hand-made tandoori ovens and power cords for hijacking electricity. Despite these additions, the tents are no match for the temperature swings of Greece’s climate. In the summers, heat waves can break 100 degrees Fahrenheit. Winters on the island bring lasting snow from the sea moisture. Asylum-seekers can expect to wait a year before their asylum applications are processed ensuring they will experience both extreme weather conditions.

In the past, asylum-seekers have employed cardboard and tarps in an attempt to block out the extreme cold and heat. Increasing the temperature a few degrees led to refugees living in environments with dank, humid air that condenses on the tent inner walls. Running water is only available inside of Moria, and these moist environments put asylum-seekers at risk for health complications. Many suffer from pneumonia and heat stroke, which there are limited resources with which to treat.

In stepped the Torch Tile.

The Product

After over thirty different prototypes and dozens of hours of overnight testing, the team created the Torch Tile. The users’ needs were at the forefront of the creation’s design. The product comes in 36 or 55 sq. ft. sheets that can be laid side-by-side (like tiles) to fully surround a tent. The sturdy, lightweight and flexible material of the tiles is Aluminet.

The knitted screen-like material allows for airflow, reduces indoor humidity and lets light into the tent for visibility. Secured using zip ties and draped over the tent ceiling, the Torch Tile cools the interior by deflecting outdoor heat and light on warm days. Similarly, in winter weather one layers a tarp over the Torch Tile to warm the tent by 5-15 degrees by reflecting body heat inward.

Then, the team founded Torch Global Inc., a nonprofit currently fundraising to mass produce tiles for distribution. The goal is to provide tiles for those in Moria and for the unsheltered populations in Los Angeles.

Protecting Homes during the Coronavirus Pandemic

The distribution of Torch Tiles has been paramount to enabling people to self-isolate during the coronavirus pandemic. One Torch Tile user from Los Angeles shared, “I have COVID and can’t isolate because my tent is too hot. This product will keep my tent cooler, so I can actually stay inside and isolate.” Recently Torch Global Inc. fundraised $13,000 for the ordering of 1,500 more Torch Tiles — protection for 1,500 more people in their homes.

The collective, global mobilization and coordination of resources necessary to resolve the refugee crisis in Greece is unlikely to occur soon enough. Even when it is, situations and conflicts will likely displace more people in the future, and asylum-seekers living in tents will be inevitable. By thermo-regulating shelters, Torch Tiles alleviate one aspect of refugees’ vulnerability and address the downstream effects of displacement.

– Tricia Lim Castro
Photo: Flickr