The mayor of Greater Caracas, Juan Barreto, announced on March 27 that the city will confiscate some 400 buildings and sell them to the people currently renting apartments within them.
"All good rented buildings which were constructed between 10 and 30 years ago, or longer and of which the sum of the rental contributions has been, when totalled up, more than five times the value of the building, become expropriated by the Greater Caracas city government", Barreto told Union Radio.
The Caracas mayor argued that five times the price of a building is a reasonable profit for an investor to receive. "The business of renting is legitimate, but it can't be indefinite because eventually it becomes predatory. The buildings which have been paid for five times over should be put on the market for their inhabitants who find themselves perpetually renting", he said.
Venezuela, and Caracas in particular, is facing a severe housing crisis in the wake of population-displacing natural disasters, the deterioration of substandard housing built by past governments, and population growth. While numbers released from the Central Bank of Venezuela show that Caracas rental prices have risen at less than half the rate of overall inflation since 2005, due in part to rent control, the Metropolitan Real Estate Chamber of Commerce president said last month that real estate prices in the city rose 35% in 2005, according to Bloomberg. And last year, Alvaro Sucre, the president of the Venezuelan Chamber of Construction, estimated that there was a housing deficit of about 1.6 million homes, of which about 940,000 families live in overcrowded conditions and 640,000 live in shacks without adequate basic services, according to El Universal.
Barreto also announced the development of mega housing construction projects in Caracas.
Barreto's speech came in the wake of Sunday's Alo Presidente, President Hugo Chavez's weekly television program, where Chavez announced a program to ramp up construction of new buildings, with the goal of reaching 150,000 new homes by the year's end. Previously the most homes built by the government were just over 66,000, but Chavez criticised these for being substandard. The value of each home will be about US$25,000, based on the actual cost, of which two-fifths will be totally subsidised by the Ministry of Housing. Homeowners will pay back the difference over 20 years at 4% interest.
The Venezuelan president also said that he is considering limiting speculation on houses by forcing some people to sell their houses at government determined rates. "I have no problem signing a decree to regulate housing prices ... If someone in Caracas has five homes and refuses to sell at the regulated price, we'll implement an expropriation decree for the public good and pay the owner what the apartment is really worth", he said.
However, these moves by the government are meeting with resistance. According to El Universal, the Association of Property Owners of Urban Buildings called a meeting on March 29 with neighbourhood associations in Caracas in order to form a common front against building invasions and expropriations.
The nation's real estate association and other business groups have also raised objections, saying that expropriations and regulation will only make matters worse.
[Abridged from Venezuelanalysis.com.]
From Green Left Weekly, April 12, 2006.
Visit the Green Left Weekly home page.