The Spanish real estate market is experiencing a period of intense activity, although far from the numbers of the boom of the last decade, in which the rent is becoming increasingly consolidated to the citizens. In this context, the Spanish Government has raised the possibility of reforming some articles of the Law of Urban Leases (LAU), especially in two crucial aspects: the duration of contracts and the updating of rents.
In terms of length, it is proposed to expand from three to five years (if the owner is a natural person) or seven years (if the owner is a legal person) the duration of the rental contract. This first differentiation between owners, it is discriminatory, and has the sole purpose of penalizing the institutional investors, without arising from this measure any benefit the whole of the citizenry.
The second aspect that wants to be regulated is the update of income, ligándolas exclusively to the rise in the CPI. The current Law sets an update to CPI unless otherwise agreed between the parties, allowing them to agree to rent increases that would compensate investment in improving housing. In any case, always as a result of a negotiation agreed between parties and in a large market and transparent with more than three million rented homes and more than 100,000 units available in the marketing channels.
This project of reform is presented in a time when the real estate market in Spain is evolving towards a new model very different from the known until now. For this reason, it is necessary to analyse the future evolution of the sector based on objective data, compared with the reality of the rest of the european countries and trying to combat some of the false ideas that are being installed on the rental market.
Most of the 17% of the population of the opt as for renting a house as a vital choice, a choice to rise due to various factors among which are the difficulty of access to mortgage credit, the sharp cut of aid to the purchase of housing, the casualisation of the labour market and a change in the mentality of young people, who choose to rent as an alternative that gives them more mobility than home ownership.
this Is a market that, in the Spanish case, the account with a low professionalization. Only 3% of the park's current housing is managed by professional operators, the rest (97%) are in the hands of private owners. In this sense, Spain is an exception in Europe, where the professional market reaches 30% of the total. It is also different from the reality of our country in terms of the supply of public housing intended for the social rented, with only 1.5% of the total supply, a figure that rises to 15% in countries of our environment. Spain has much room for improvement in this aspect.
And, finally, it is important to combat the idea that there is a bubble in rental prices and widespread. What is certain is Grandbetting that this market is very heterogeneous: only five populations in Spain more than 10 euros per meter cuadrato and month, and in more than half of the autonomous communities, the rent prices are stabilised or decreasing. The increments relevant to the price of leases in the residential sector are limited to a few cities.
Taking into account this reality of the market, the steps to apply must be cautious in order to avoid unwanted effects in the territories where there are currently no problems and there is a situation correct and satisfactory both to landlords as to tenants.
however, the measures proposed by the Government may have the opposite effect to that intended, and eroding the goal: to facilitate access to housing to groups with low-income. Adverse effects and proven in several countries that attempted to regulate the rental believing that it would improve the social function of housing, are:
1) Reducing the supply of rental housing units and, consequently, increase prices.
2) The owners are more strict by choosing to tenants of greater financial stability, which hinders the access to the rental of the families with less resources.
3) The price of the leases will increase initially to try to mitigate the effect of near-freezing of income during the mandatory period of rental.
4) A scenario of rents with binding contracts over the long term and without possibility of upgrade revenue to market will cause the owners (and particularly professional investors) like to the sale of the property at the expense of the rental, stressing the rising prices.
5) If the landlord is unable to recover the invested in improvements, rehabilitation and maintenance of homes, given that the annual increase of the income would be limited to the variation of the CPI, the landlord will not invest in these headings, which will be detrimental to the quality of the housing stock and the tenants.
6) It reduces the incentive to promote rental housing.
have an Impact on the social function of the housing through the increase of time limits or limiting the revenues of private entails transferring the public responsibility to the private sphere generating the opposite result of that intended. From the different Public Administrations must be promoted the policy of public housing in regime of rent, along with the momentum of vehicles of collaboration public-private (under models of housing-association anglo-saxon) and aid to families at risk of exclusion —in collaboration with private—, leaving that in parallel to consolidate a professional market of private operators, there is a regulatory framework reasonable and stable, they will invest in rental properties giving an opportunity of access to housing to families who can not access the purchase.
it Is important to review properly similar measures applied in other countries and learn from mistakes. The business of rental housing on a large scale in thousands of Spanish towns and cities requires a high degree of professionalism, with a very high impact in direct and indirect jobs and a commitment to innovation and digitization. In short, it's about giving access to a housing to many families and, most especially, the young.
Eduard Mendiluce is the ceo of Aliseda, and Anticipates, real estate owned by Blackstone