Eric owns a home, a small apartment in Sant Cugat del Vallés that he decided to rent when he had to move to another city for work. The Housing Law, which prohibits agencies from charging fees to tenants, had not yet come into force, but he decided to carry out all the procedures on his own: “I am a lawyer and I have the knowledge to draft and adapt the contract to the regulations and avoid that expense to the interested people.” Already then he began to receive a flood of emails from real estate agencies interested in his apartment, which he ignored. The announcement was clear, “from individual to individual.”
A few years later, with the rule now active, he had to restart the process. “I published the phone number by mistake and, in one day, 4 real estate agencies called,” he explains in conversation with elDiario.es. The strategy is well known. “A common practice among intermediaries is to identify the owners who advertise their homes on large portals, in order to offer them management services,” indicates a study by the Barcelona Urban Research Institute on the Impact of real estate companies on the rental market.
The research is based on a survey of nearly 2,200 households in Barcelona and Madrid and qualitative interviews with agents and owners of rental housing. “The landlords interviewed claim to have received a large number of calls from real estate agencies within a few hours of publishing their advertisement on the portal,” indicates the work, which points out the “strong incentives” that these management services represent for landlords. They even offer at no cost.
In the study, the authors identified how the volume of homes managed by real estate agencies is increasing at a good pace. “Barcelona is the vanguard city in this sense, with 75% of the contracts signed in the last year managed by agencies. In Madrid, the percentage is much lower, but we detect that it is growing at a higher rate,” indicates researcher Jaime Palomera. As the following graph shows, the number of individual-to-individual agreements in Madrid has fallen 15 points in five years.
“The main mechanism for attracting offers is to offer the service to the landlord, but make the tenant pay for it,” says Palomera, through the introduction of “expenses of all kinds that allow (fees) to be collected in a hidden manner, despite that the law is clear.” Specifically, Consumption investigates several real estate agencies after detecting illegal practices, such as the charging of management commissions and abusive clauses, such as insurance for non-payment of rent or other types of services.
When Eric was contacted after the Housing Law prohibiting these charges came into force, he was surprised that they offered the service for free. “When I rejected them, they insisted on me or treated me as if I were stupid for not accepting services that, they continually reiterated to me, were free, although in reality they are not, because I was not going to pay for them, but someone was going to pay for them.” ”, he develops.
“They treated me as if I were stupid for not accepting services that, they reiterated to me, were free, although in reality they are not, because I was not going to pay for them, but someone was going to pay for them”
Eric
— Home
And who pays them? “In general, agencies continue to charge fees to tenants, instead of landlords, because their business is exploiting tenants,” denounced Víctor Palomo, spokesperson for the Tenants Union. in this information.
For Palomera, who is an anthropologist and doctor from the University of Barcelona, these highly standardized tactics of attracting supply, in practice represent a barrier to free competition. “It is a textbook captive market. There is a growing consensus among operators to charge fees to the tenant; If more and more apartments are rented through real estate agencies, unless you have someone you know, when you enter a large portal you will have no alternative,” he explains.
“Higher rents, more abuses and an attempt to avoid the law”
“We know, from research and practice, that the goal of real estate companies is to make money and generate income. With mortgages, we have many experiences of abuse, which have been transferred to the rental sector, which is what is currently growing,” explains doctor in Geography and housing expert Melissa García-Lamarca. This trend, he believes, translates into “higher rents, more abuses and an attempt to avoid the law, charging different rates or services.” “It is playing with the misinformation or lack of information of the tenants,” who are left in “a bad situation,” he clarifies.
According to data from the National Classification of Economic Activities, the profits of intermediaries in the real estate sector, not including construction, have skyrocketed by 52% since 2015, 34 points above sales and without generating practically new employment.
Although the rental market in Spain is very fragmented, with 95% of the housing stock in the hands of individuals, the fact that 3 out of every 4 contracts signed in Barcelona in the last year have been brokered by agencies is an example of the influence of these companies to impose not only the conditions, but also to include them in the prices. “I was surprised when they told me that I could rent the most expensive home, get more out of it. I saw a desire to inflate the bubble,” says Eric, who is also currently renting.
“It is enough for there to be large chains, with many franchises, that begin to call advertisements from portals to distort any dynamic that resembles the free market,” Palomera continues. The expert gives as an example the fine of 1.25 million euros that the National Markets and Competition Commission (CNMC) imposed in 2021 on a group of companies specialized in real estate intermediation, including Idealista, for reaching an agreement to fix prices. and minimum commissions. Bridging the gap, because in the case of real estate companies it has not been proven that they have explicitly carried out any agreement, the statement of this organization came to indicate that a group of companies has the capacity to distort the market.
“Please abstain agency”
Lourdes rents her father’s apartment in Madrid, where real estate companies are increasingly cornering the market. More than five years ago, 73% of the contracts signed in the city were agreed between owners and tenants, without intermediaries. The figures are far from those of Barcelona, but that direct relationship has not stopped shortening.
Despite this trend, Lourdes prefers to interview and get to know for herself the people to whom she rents the property. “It’s my apartment and I do it because I need it, it’s not a business,” he says. For this reason, when she posted the ad in Idealista and Fotocasa in October of last year, she made it very clear that she did not want agencies to contact her. “The first to call were agencies. They are on the lookout and as soon as an ad comes out, they call you. They don’t respect that you want to rent it on your own,” he explains.
In his case, he admits that he was never offered the service for free. In his case, the bait was always to reach more clients or the promise of “very nice people who are looking for just what they are renting,” he explains. After the denials, Lourdes detected a sibylline tone: “They tell you that they are sending you someone directly, that you are wasting your time or they wish you luck in a derogatory way.”
Idealista himself points out on his website that “real estate portals are one of the best options for recruiting real estate” because they have “all the information” that agencies need and “allow them to contract services” and “save time and money.” In an article published in 2020, they estimated that “approximately 10% of individuals contacted to acquire their property agree to work with a real estate agency.”
Contrary to what is usually said, the greater professionalization of the rental market has worsened relations between landlords and tenants.
The underlying question is whether the management of the agencies improves the conditions in which homes are lived. “Contrary to what is usually said, the greater professionalization of the rental market has worsened relations between landlords and tenants,” indicates the report from the Barcelona Urban Research Institute, which points out that “the greater the presence of real estate agencies and the less treatment direct between the parties, the worse the tenant experience is.”
According to the research, the experience worsens in all areas, from satisfaction with housing, to price increases, misinformation, the feeling of residential instability or discrimination in access. The survey reveals that in Madrid, 63% of those who deal with a real estate agency are not satisfied with their home, compared to 51.4% of those who deal directly with the owner. In Barcelona, they are 66.8 and 55.4% respectively.
The study identifies as reasons that contribute to dissatisfaction with housing problems such as lack of repairs, illegal rent increases, the collection of fees, lack of maintenance of common areas or pressures and threats to abandon the property. In general, those who deal directly with the landlord in Madrid claim to have some type of setback of this type in 32.4% of cases, 20 points less than those who deal with the agency. In Barcelona, the difference is similar, from 21.3 to 42.8%.
The survey data present great differences in very specific issues that represent real headaches for the tenant population. In Barcelona, for example, 32% of tenants who deal with real estate agencies say that their landlords have refused to repair significant damage, compared to 14% of those who speak directly with the owner. In the case of repairing appliances, the difference is also multiplied by two: 20%, compared to the 9% who deal with their landlord. And in Madrid the numbers are similar. Among those who deal with the agency, 25% indicate problems with repairs of damages and 19% with appliances, compared to 14 and 11% of those who deal with the owners.
Aside from large rentiers or those who only seek to squeeze the most out of their tenants, Eric makes his own analysis of this data: “For me, I am interested in having someone who stays for a long time, is comfortable and who takes care of the apartment. The interest of the real estate agency does not correspond to this. To the extent that they charge for showing it and renting it, they have the incentive that the more times they rent it, the more they earn.”
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