Crisis Makes Spain Change Perception of Tenancy
4/12/2014 – Cinco Dias
In its ‘Rental Market X-Ray’ report, intermediary firm Alquiler Seguro assures that ‘presently up to 40 per cent of our clients are owners and tenants at the same time’.
This is one of the reasons why lease has been gaining popularity over the last, tough years of recession. ‘While in 2006 and 2007 only households unable to pay a mortgage or foreign newcomers rented flats in Spain, today’s tenant’s profile has changed as renting a home became the first option for, to give an example, young people aged between 25 and 30’, CEO of a leading real estate firms said. With a new office in the Basque Country, his company has just grew to 24 establishments in Spain.
Experts say the main lessons the crisis gave to the property market is to forget that ‘homes never depreciate and renting equals to throwing money down the drain’. ‘Both specialists and citizens realize that leasing a dwelling does not restrict labor mobility but so does a mortgage’, Alquiler Seguro’s CEO Antonio Carroza remarked.
Lease-supporters give as an argument high returns obtained from such an activity. In best cases, the owner receives a 4 to 5 per cent ROI, while just a year and a half ago the figures oscillated between 2 and 3 per cent.
On the other side, and according to the aforementioned report, within the 12 Spanish provinces where Alquiler Seguro has presence, empty homes total at 1.4 million. Barcelona leads in this ranking (283.155), followed by Madrid (263.279) and Valencia (214.002).
However, sources from the company pointed out that ‘not all of these properties are suitable for rent due to being second residences or not meeting basic letting requirements’.
In regard to arrears in urban renting, the study states general trend goes up encouraged by the crisis. Again, in Barcelona it hit highest with a 22.76 per cent upsurge, then it shot 21.45 per cent up in Malaga, and in Valencia by 18.54%.
Further on, the research outcome shows that in Alava, Biscay, Gipuzkoa, Pamplona, Valencia, Alicante, Malaga, Valladolid and Zaragoza perform best as ‘balanced’ markets with almost non-existent gap between demand and supply rates. The gap has been measured by an indicator designed by Alquiler Seguro itself and it compares local supply of homes for rent and searches of potential tenants within a determined area.
Thus, Sevilla is the only province where the indice points to the floor (0.57), meaning a tired market with oversupply and little demand what causes prices to dip. On the other end one may find Madrid and Barcelona (over 1.50), where just the opposite happens and therefore rental prices steer upwards.
Original story: Cinco Días (by Raquel Diaz Guijarro)
Translation: AURA REE