Rent. The shortage is the investment.
Average rents in Britain just hit £1,400 a month, and the biggest landlords in Europe are hoping that doesn't change. Spain has just found out what that looks like.
THE GIST ON RENT: "Housing and Rent in Spain"
What happened to Spain's council flats?
Picture 2013. Spain is broke. A Madrid council sells 1,860 council flats to Blackstone, a New York investment firm, for €69,000 apiece.
By 2020, they are the biggest landlords in Spain. This March, Blackstone sold 5,200 of the flats to a Canadian investment firm for €200,000 each. On Saturday, tens of thousands of people were protesting in the streets.
How do you triple your money without building anything?
You buy when the seller's desperate and jack the rents up. Some have just gone up by 43%. And then, big brain time: you do nothing.
Spain built 83,000 homes last year. It needed 226,000. Supply barely moves and demand just racks up, and that imbalance does all the work. You just hang on, watch the value go up and flog it to a greater fool for a profit.
What does that look like for the people living there?
Two weeks ago, one of these investment firms kicked an 87 year old out of her flat in Madrid, a flat her father had rented since 1956. They jacked the rent up above her pension, and 10,000 people went into the street in protest.
In Parliament on Friday, they voted down the bill to stop funds buying more, by six votes.
Could that happen in Britain?
We have exactly the same problem here. And the same firm, through a company called Sage, is now Britain's biggest new builder of affordable homes.
So the next time your rent goes up and the name at the bottom of the letter is a company, not a person, that's what they're betting on: that Britain's not building enough homes. Up until now, it's been a pretty safe bet.
Should big investment funds be allowed to buy homes?
Your take. One tap, then see how everyone else voted.
Quick answers
What did Blackstone buy in Madrid?
1,860 council flats, bought in 2013 for €69,000 apiece from a Madrid council. By 2020 they were the biggest landlords in Spain.
Why does a housing shortage help big landlords?
Supply barely moves while demand rises, so the imbalance does the work. You buy cheap, raise rents, hang on and sell to a greater fool.
How many homes did Spain build against what it needed?
Spain built 83,000 homes last year. It needed 226,000.
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