Since the Council of Ministers approved last October the draft State Law for the Right to Housing, today in parliament for the definitive green light, the usual rhythm of movement of the rental market has been slowing down. In these almost six months, according to data provided by the National Federation of Real Estate Associations (FAI), the supply of rental houses has fallen by 15.5% throughout Spain, with higher percentages, close to 20%, in regions like Catalonia.
In recent weeks, according to the general coordinator of the federation, José María Alfaro, the fall has accelerated even more. From the FAI they attribute it to the shock plan promoted by the Government to combat the inflationary crisis and that includes, among other measures, a limitation on the updating of rental income to the CPI. In other words, for three months only rents subject to annual review may be made more expensive by 2%.
The data, Alfaro continues, reflect the slowdown that the sector is experiencing from two angles. On the one hand, there are the dwellings that were initially offered and that have been leaving the habitual residence rental market towards other forms of ownership, such as ownership, tourist rental or seasonal rental. On the other hand, there are the new houses that under other conditions would have joined the ranks of the lease offer, “but due to mistrust of an interventionist law, they choose to go directly to other modalities,” says Alfaro.
According to the general coordinator, “the average rate” of housing rentals that we have been registering in recent years is falling. At the same time, the volume of transfer of rented houses that are passed to the sale is today “double that of a year ago”.
The big problem, they assure from the federation, is that the supply of rental housing is decreasing in a context in which the demand for houses is booming after the forced stoppage of the pandemic. Although there are several formulas on the table designed by the central government and by various regional administrations to expand public or affordable housing stocks through public-private collaboration, adds Alfaro, they have a medium- and long-term horizon for realization. For this reason, “all the measures that discourage the supply of habitual residence rentals in the short term mainly harm the tenant”.
The housing law, which according to the plan sent to Brussels should be definitively approved in the third quarter of this year, includes a series of measures to encourage the freezing or lowering of rental prices in those areas with a stressed market.
Among the main formulas is the possibility that the autonomies that so decide declare their hot zones as stressed, something that would impose a limitation with respect to the official index for the houses of large holders and a price freeze, in reference to the previous contract, in the homes of small landlords.
However, as detailed by Alfaro, rather than due to a drop in rental profitability, the flight of housing in traditional leases is mainly motivated by the lack of legal certainty.
Since the Government announced two weeks ago the freezing of the update of rents to the CPI (which closed March close to 10%), 12% of investors who were thinking of buying a home to rent it have decided to postpone the purchase. According to data published yesterday by Idealista, 34% of buyers believe that the 2% limit set by the Executive will have a negative impact on the market. “The measure represents a new setback for the landlords, who once again see how the rules change in the middle of the game,” explains the portal’s spokesman, Francisco Iñareta. “In many cases, it will cause the withdrawal of their homes from the market due to the evident legal insecurity that this entails. The effect you can achieve may be just the reverse.”
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