Testa Suspends the Rental of its Homes Following Approval of New Rental Act

24 April 2019 – El Boletín

Blackstone, the fund that has invested the most in the Spanish real estate sector over the last five years, has reportedly suspended the rental of hundreds of homes managed by its Socimi Testa following the approval of the new Rental Act by Pedro Sánchez’s government on 1 March.

The new decree lengthens rental contracts, giving tenants the right to remain in properties for seven years in those cases in which the landlord is a company, and prohibits rent increases above CPI.

Testa has more than 11,000 properties under management and Blackstone has owned a majority stake in the Socimi since last year after acquiring shares from banks and other groups.

According to professionals from intermediary companies that work for Blackstone, a decision was taken to suspend Testa’s activity following the approval of the decree, in light of the uncertainty generated. Activity is expected to resume in May, following the general election.

Blackstone already warned a couple of months ago that the new Rental Act is discriminatory and would only serve to increase rental prices.

Original story: El Boletín

Translation/Summary: Carmel Drake

Congress Approves the New Rental Act

3 April 2019 – Eje Prime

On Wednesday, Congress approved the decree law containing the latest measures to regulate the rental market. The PSOE, Unidos Podemos, Esquerra Republicana, PDeCat, PNV, Compromís and EH-Bildu all voted in favour of the law; the PP and Ciudadanos voted against it; and the UPN abstained.

The decree containing the urgent rental measures entered into force on 6 March after being approved by the Council of Ministers. The law limits increases in rental prices to the rise in the Consumer Price Index (CPI) and extends the duration of contracts from three to five years, amongst other measures.

The bill also grants town halls and autonomous communities the power to decide their own housing policies in accordance with their respective fiscal frameworks.

Original story: Eje Prime 

Translation/Summary: Carmel Drake

The Hatchwell’s Socimi Excem Plans a €300M Capital Increase

18 March 2019 – El Confidencial 

The Socimi Excem, which is linked to the Hatchwell family, considers that its particular business model is immune to the new Rental Act. The company specialises in the rental of shared flats to university students and young professionals. As such, its clients are not subject to some of the aspects of the new legislation that are causing the most concern, such as the new contract terms (five or six years) or the limits on avals and guarantees.

Each young person pays the Socimi an average of €600 per month by way of rent and typically stays in the property for less than a year. That allows the vehicle to generate a gross return of 7.46%.

Moreover, in Spain, around 400,000 students have to find accommodation every year and 85% of them want a shared flat, rather than a hall of residence. As such, Excem is convinced that it needs to expand its business model across Spain and, to this end, is planning to undertake a €300 million capital increase this summer to finance that expansion.

Currently, Excem has 42 flats comprising 288 rooms, spanning a residential surface area of 8,000 m2. The company wants to expand to Barcelona and Valencia first, although it also has cities such as Málaga, Sevilla, Bilbao and Vigo on its radar. The aim is to grow the portfolio to include 4,000 beds across the whole Peninsula.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

The Government’s New Rental Act Limits Annual Price Increases to CPI

1 March 2019 – Eje Prime

On Friday, the Government approved a new Rental Act containing urgent measures for the rental sector, including a limit on annual price rises for new contracts to CPI. However, in the end, no IBI rebate incentive was included to reward landlords for maintaining rental prices below the reference price index.

The measure to limit rental price increases will take effect for new contracts signed from the date that the law enters into force.  Moreover, the law provides for the preparation of a state-managed house price reference index within eight months, which will be updated annually.

In addition, the law extends the period for extending rental contracts to five years, from the current term of three years.

Original story: Eje Prime

Summary/Translation: Carmel Drake

Spain’s Real Estate Sector Condemns the Government’s New Rental Act

1 March 2019 – Ok Diario

The real estate sector has expressed its widespread disapproval of the Royal Decree Law approved by the Government on Friday containing urgent measures for the housing and rental sectors.

Investment funds, real estate experts and rental associations alike have all condemned the new law as discriminatory, restrictive and short-termist.

Claudio Boada, Head Consultant at Blackstone España, said that the new legislation will undoubtedly result in more upwards pressure on prices and a reduction in supply, whilst sources at Fotocasa criticised the lack of tax incentives for landlords who rent their homes at affordable prices.

If this royal decree is ratified, then “rental contracts will have been subject to three different sets of rules in less than three months”, observed Gustavo Rossi from Alquiler Seguro, which is both confusing and unsustainable.

Original story: Ok Diario 

Summary translation by: Carmel Drake