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Spanish Accuse Goldman Of Hiking Rent For Poor

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The London investment arms of Goldman Sachs and Blackstone were accused last night of jacking up the rents of Madrid’s poorest people after they bought thousands of the city’s council flats.

Many, unable to afford their new terms, have now been threatened with eviction or moved out.

During the financial crisis, the city was advised by the accountants PwC to sell off swathes of its social housing in order to raise desperately needed funds. It sold 5,000 flats to investors including Goldman and Blackstone.

Nothing changed in the tenants’ rents until their leases ran out, when, in many cases, the charges shot up dramatically.

Reuters interviewed over 40 households who have been thrown into difficulties by the rent rises. They include Jamila Bouzelmat, a mother of six who lives in a four-bed flat now owned by Goldman and a Spanish property firm. She said her family had been paying €58 (£46) a month rent from her husband’s €500 unemployment benefit. But in April, her new landlords suddenly took €436 from her account.

Ms Bouzelmat said she only discovered the problem when she tried to pay an electricity bill: “We went to take money out and there wasn’t a cent left in the bank,” she explained.

One in five adults in Madrid are unemployed.

Goldman and Blackstone are entirely within their rights to charge market-price rents. However, a number of lawsuits have now been launched by local politicians against the councils that sold the homes.

The problem is particularly bad in Spain because it already had one of the smallest stocks of social housing in Europe. Now 15 per cent of it has been sold off to London banks and private equity firms, there is even less.

Sounds like they need to become a hard working family and get a job... :ph34r:

Clearly Spain needs rents like the UK although €436 seems too cheap when compared to London rents. The giant squid should double it up again.

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PwC discharge two barrels of neoliberal ideological dogma.

Financial crisis caused by excessive debt and speculation in property? Sell the housing of the poor from under them to raise money for the state.

What could possibly go wrong?

Edited by Bear Goggles

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Goldman and Blackstone are entirely within their rights to charge market-price rents.

Haven't Goldman and Blackstone been subsidised to help to buy those properties through QEing and so on in the US and the UK etc.

If they hadn't been so subsidised maybe the rents would have reduced rather than increased - if it was truly a "market".

Edited by billybong

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Clearly the Spanish government needs to introduce tax credits and housing benefit to "help the poor".

That's the unintended consequence of neoliberalism isn't it?

The ideology dictates that a private company (preferably a global financial institution) is always more efficient than the state, so state housing must be sold off and rented for a profit. Society is then faced with the decision whether to let people fall into destitution (thereby risking the political legitimacy of neoliberalism itself) or keep them afloat with state subsidies, this time not directly via social housing, but indirectly via "market rents" to a corporation. How's that for efficiency?

The result of this is that no subsidies can be given to the poorest in society without a corporate entity (usually a global financial institution) taking its hefty cut first.

Corporate socialism at work, comrade.

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