Spaniards Hold onto their Homes for Almost 15 Years on Average

1 April 2019 – El Confidencial

On average, families and individuals in Spain own their homes for 14 years and 8 months, almost double the figure reported in 2009, a year after the burst of the real estate bubble. According to data from the College of Registrars, the average ownership period recorded in 2018 is the longest in the historical series and reflects the fact that purchase decisions nowadays are more prudent and less speculative.

Specifically, 70% of homeowners have not sold their home for almost fifteen years, whilst 80% have owned their homes for more than 8 years. Meanwhile, just 10% of homeowners buy and sell their home within five years.

Moreover, the data reveals that second-hand homes accounted for 82.5% of all transactions in 2018, compared with new homes, which accounted for the remaining 17.5%. At the height of the crisis, the two types were almost on a par. Both of these data are positive for the real estate sector as a whole because they are allowing more sustained growth.

The other major finding to emerge from the Registrars’ data relates to the economic effort that families have to make to buy a home. The mortgage payment over salary percentage was 29.7% in 2018, with higher rates in Madrid (35%) and Cataluña (33%). According to experts, that figure should not exceed 30% if households are to have enough to cover their other expenses. What’s more, the ideal percentage is between 20% and 25%.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

Spain’s Residential Rental Sector Continues to Thrive

6 January 2018 – Cinco Días

The current rental market in Spain has nothing or very little to do with the one that existed in the noughties (2000-2009), when being a tenant was almost equivalent to being a second-class citizen, as Gustavo Rossi, President of Alquiler Seguro, recalls. A study compiled by Idealista maintains that whilst in 2000, homes offered for rent represented just 9% of the market, by the end of 2017, Madrid was the third-placed city in the ranking of places with the most rental homes in Europe, whilst Barcelona was ranked sixth.

That increase in supply has been driven by an exponential growth in demand for rental homes and by the boom in tourist rentals. During the first few years of the crisis, demand switched to the rental market, above all due to necessity. Faced with the impossibility of buying a home due to the high prices or the closure of the credit tap by the banks, or even both factors, families had to resort to renting as their plan B.

Nevertheless, and as the economic and employment recovery has been gaining momentum, although the majority of those who rent still aspire to become homeowners, increasingly more households are opting to lease regardless of their economic capacity or solvency level. They are the new tenants by conviction. “The impact that the no-credit-generation (those who are not willing to get into debt and who prefer to pay to use a home) is having on the market is considerable”, explains Rossi.

One way or another, the percentage of households that rent their homes has gone from just 11% in 2001 to almost double that figure, more than 20% in 2017, according to figures from the sector. That progression is even more marked in the large cities since it is estimated that in Madrid and Barcelona, more than 30% of families rent their homes, which brings Spain closer to the European parameters, where the average number of rental homes exceeds that 30% threshold (…).

Sources at Fotocasa are convinced that this year (2018) there will be a lot of talk about the rental market once again. “The high returns that investors are seeking, the boom in tourist apartments and the change in mentality (towards renting) are going to continue putting upward pressure on rental prices, above all in the large cities”, says the firm’s Head of Research, Beatriz Toribio. In this sense, the table published by the Bank of Spain comparing yields on rental homes with those on the stock market (Ibex 35) and fixed income securities leaves little room for doubt. The latest data reveals a gross profit from rental properties of 4.2% p.a., which soars to 10.9% if we add the gain that can be obtained when a property is sold (capital appreciation) (…).

The experts offer two pieces of advice. Before choosing between traditional rental and tourist lets, investors should analyse all of the variables because it is not always more attractive for a property to be let for very short stays (refer to the comparative graph). And the Administrations are demanding that investors bet more on the rental segment, in the form of direct subsidies and tax reliefs, to encourage owners to put empty homes onto the market and that will allow them to reach maturity. “The rental market is here to stay”, says Eduard Mendiluce, CEO at Anticipa Real Estate.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Valencia’s Gov’t Incentivises Homeowners To Rent Out Vacant Properties

16 March 2017 – Cadena Ser

The Valencian Generalitat will pay insurance to families and other people who let out the vacant homes they own. The measure forms part of the new Law for the Social Role of Housing, which entered into force at the beginning of this month. In addition, the regional government is also planning to impose sanctions on banks that do not offer up the vacant homes that they own for social housing purposes.

The Councillor for Housing, María José Salvador, visited Castellón yesterday, where she explained the main aspects of the new Housing Law in the Community of Valencia. Salvador highlighted that the Law’s objective is to incentivise the rental of properties owned by individuals that are not currently occupied.

To this end, the regional government will pay insurance to protect homeowners in the event that tenants fail to pay their rent or damage properties. On the other hand, the Councillor for Housing said that the new law provides for the imposition of sanctions on banks that do not hand over their vacant homes. Salvador said that the banks should report the homes they have vacant to avoid conflicts and possible fines. Unlike individual owners, the banks will not be covered by any insurance policies paid for by the government.

Even though the Law for the Social Role of Housing only entered into force two weeks ago, the Council has already opened several meeting points, both physical and digital, where interested parties can obtain more information about the initiative.

Original story: Cadena Ser

Translation: Carmel Drake