25/08/2014 – Expansion
Spanish rental market started to take-off. This sudden change may be explained by several factors. Firstly and obviously, the recession that turned many people towards renting a property rather than buying it. Secondly, the measures taken to benefit the owner and improve the situation of the vacant home rates in the market. Thirdly, changed of the Spanish minds about the rental as ‘throwing the money down the drain’.
The percentage of citizens who prefer to rent has upsurged from 11.4% in the real estate boom to the present 18% – 20%. The numbers suggest that out of the 18 million registered main dwellings, 3.42 million are being intended for rent. If the holiday rentals added, the figure rises to 5 million.
In 2008, the main residences for rent hardly represented 2.2 million, marking 55% less than they do now. The turn started to be visible in 2011 with expansion to 2.4 million of the units. According to the calculations, the number of homes for rent reached 1 million of apartments, by 42.5% more than three years ago.
‘Rental is the logical alternative in the tough times’, says Manuel Gandarias, research director at portal pisos.com. Besides, the change in perception is becoming more and more visible. To illustrate, in 2011, 70% of Spaniards reckoned ‘renting is throwing good money after bad’ but now 65% of the Spanish residents believes it is a reasonable option, according to a report by another portal, Fotocasa.es. ‘Not only the financial crisis but also the new generation´s change in approach to renting influences the number’, explains the study´s author, Beatriz Toribio.
A Long-Term Tendency
In any case, Spain stays behind its European peers where the proportion tenant-landlord is healthier. For instance, in Germany it posts 38%, in Denmark 35%, while in Switzerland – 51%.
In Spain, rental is expected to become even more popular in the next years and will represent up to 25% of the market, forecasts Fernando Encinar, research director at idealista.com. ‘This market is developing rapidly’, he adds.
Spain´s Main Cities
However, the downward tendency is starting to rebound in some regions. For example, in Madrid and Barcelona prices go up, the portals claim. The second city saw the values increasing 2.3% in July (the IESE & Fotocasa.es), the same precentage as they rose in the second quarter of 2014 (idealista.com). In Madrid, in the second quarter of the year, rents climbed 1%, whereas in July they grew by further 0.2%.
Manuel Gandarias believes that ‘locally, pricing adjustment accomplished some time ago and the balance has been reached’. In Beatriz Toribio’s opinion ‘the rental values are bound to stabilize, therefore we will not watch significant falls until the end of the year’. Fernando Encinar agrees with her and adds: ‘it is normal that in medium-size and small towns the prices tend to fall, unlike in large cities.’
The boom is ‘mostly due to amendments in legislation’, assures Encinar. ‘In the last years, there have been many initiatives on renting development, such as legal security for the property owners‘. On the other hand, the Government has cancelled the 100% tax exemption for renting to young people (below 35).
In conclusion of the report, Beatriz Toribio sums up: ‘It is a good moment to rent, especially for the ‘good tenants’ who hold a great negotiation power.’
Original article: Expansión (by Juanma Lamet)
Translation: AURA REE