Ministry of Development to Promote 5,000+ Rental Homes for Less than €400

19 November 2018 – La Razón

The Minister of Development, José Luis Ábalos, has announced that his Ministry is going to transfer €21.5 million to the Public Land Management Company (‘Entidad Pública Empresarial de Suelo’ or Sepes) to promote the construction of more than 5,000 social housing rental homes, which will cost no more than €400 in Madrid, Barcelona, Valencia, Sevilla, Ibiza and Málaga.

At the Europa Press Informative Breakfast, the leader of the Ministry of Development said that the creation of these 5,000 homes, together with the 1,500 already included in the State Housing Plan, would account for almost one third of the 20,000 homes recently promised in Congress.

Specifically, Ábalos said during his appearance in the Lower House that the Ministry is going to promote a stock of 20,000 public homes for rental over the next four to six years with the aim of increasing the supply of such homes and helping to stop their rising prices.

For Ábalos, these measures lay the foundations for a housing policy that aims to guarantee access to housing. Nevertheless, he said that he is aware that this task, together with the protection of access to housing, will require the assistance of all of the administrations and political forces. For that reason, he urged that a “major agreement from the State for housing in Spain” be reached.

Decapitalising the stock of social housing

In this vein, he confirmed that the stock of social housing has been decapitalised to an affordable price and pointed out that this represents only 2.5% of the housing stock in Spain and that is “one of the lowest rates” in the European Union.

“Access to housing is a total headache for the middle and working classes and merely a pipe-dream for young people”, he added, after indicating that spending on housing by Spaniards living in rental properties is “well above the European average”, which is generating “a situation that cannot be permitted”.

During his speech, the Minister made it clear that recovering talent, raising the Minimum Inter-professional Wage (SMI), providing more wage stability and increasing pensions “are the right proposals to provide stability for Spain”.

He also said that work is being performed on long-term measures to increase the supply and recover the stock of homes, although he pointed out that work is also being carried out in the short term to modify the Urban Rental Law (LAU) to “limit guarantees” and give tenants more stability, and on the Civil Procedure Law (…).

The Royal Decree for Housing: due before the end of the year

When asked about when the Royal Decree that integrates the package of measures announced at the beginning of the legislature is going to come into force, Ábalos confirmed that the plan is for it to be approved before the end of the year because, in his opinion, “some of the measures are urgent and we need to get on with them”. In this way, he said that the real estate market in Spain is “reaching breaking point”.

In this vein, he said that “in Madrid, there are a lot of people who share flats because they do not have any other choice and all of that affects the minimum life project”. “What we are doing is not going to have a direct or immediate effect, but the urgency is vital in cities such as Madrid and Barcelona”, he said.

Original story: La Razón 

Translation: Carmel Drake

Sánchez Reveals that the Housing Law will Extend Rentals to 5 Years

12 September 2018 – El Diario

The President of the Government, Pedro Sánchez (pictured below), has demanded agreement from the political groups this afternoon regarding the next Housing Law, which will include, amongst other measures, an increase in the terms of rental contracts, and their subsequent extensions, to 5 years from their current duration of 3 years.

Sánchez posted the request on his Facebook account, with a link to Twitter, where he indicated that he was “appealing to all political forces to reach a pact that will convert housing into a right for citizens, far removed from speculation”.

The President of the Government highlighted that he wants to “shield” the “social function” of housing and he revealed several aspects in this regard.

Besides the increase in the duration of rental contracts and their subsequent extensions to five years, Sánchez highlighted “a shock plan for 20,000 rental homes to increase supply and whereby reduce the pressure on prices”.

Similarly, he promised an “improvement in the fiscal framework to stimulate supply and moderate prices”, a “review of the aid programs for young people”, and the “regulation of tourist apartments”.

Sánchez also mentioned an “improvement in the financing of housing developments through the ICO”, the Official Credit Institute, as well as a “reorientation of the State Housing Plan to promote and protect a public housing stock that is sufficient and affordable, and which allows us to attend, in particular, to the needs of the most vulnerable people in society”.

As the Head of the Government concluded, “Achieving social progress that will change the lives of thousands of people is in our hands”.

The Minister for Development, José Luis Ábalos, reported last week that an inter-ministerial group was working on specific proposals for housing, and he said that in terms of addressing the rise in rental prices, they are studying legal reforms regarding rental contract terms and extensions, amongst other measures (…).

Original story: El Diario 

Translation: Carmel Drake

Investors Increase their Commitment to Rental Housing

3 May 2018 – Expansión

The boom in the residential market, the changing habits in society, the difficulties involved in accessing housing and the increase in mobility have all led to a rebound in the residential rental market in Spain. According to the latest data from Eurostat, more than 22% of Spanish households live in rented properties, although that figure is still well behind the average for the European Union (34%).

In addition, the State Housing Plan, which seeks to encourage rental amongst the younger generation, and the greater professionalisation of the sector, is going to serve to further boost the rental market in Spain.

The change in trend, as well as the increase in residential rental yields, has compelled investors to analyse this business as an alternative to other real estate assets such as offices, shopping centres and hotels.

To lead this market, certain players have redoubled their commitment to rental housing, such as the case of Testa Residencial – the Socimi in which Santander, BBVA, Acciona and Merlin hold stakes – which owns almost 9,300 residential rental properties, with a gross value of €2.275 billion and annual rental income of €72.2 million.

Stock market debuts

That Socimi is preparing its leap onto the market, which will be carried out through an offer of its existing shares (OPV) and an issue of new shares (OPS) aimed exclusively at qualified investors.

One of the first players to back this business was Blackstone, which purchased 18 residential developments, containing 1,860 homes in total, in the Madrilenian neighbourhoods of Carabanchel, Centro, Villa de Vallecas and Villaverde from the Municipal Housing and Land Company of Madrid (EMVS) in July 2013. In 2015, the fund debuted its Socimi Fidere on the MAB (Alternative Investment Market) with 2,688 social housing properties, including those acquired from the EMVS two years earlier. Currently, Fidere owns around 6,400 homes for rent.

The fund also debuted Albirana on the MAB in March 2017 with a portfolio of 5,000 rental homes proceeding from Catalunya Banc loans. Another star of the real estate sector that has detected an opportunity in the rental sector to offload its assets is the Company for the Management of Assets proceeding from the Restructuring of the Banking System (Sareb) with Témpore Properties. That Socimi debuted on the MAB in April with a portfolio of 1,553 residential units, which have a gross value of €175 million.

Another player is Vivenio Residencial, the investment vehicle created by the Dutch pension fund APG together with Renta Corporación. Vivenio has invested around €200 million in the purchase of properties and now owns more than 1,000 rental homes. The Socimi plans to debut on the stock market in 2019.

According to data from Armabex, in 2017, five new Socimis debuted on the stock market with residential assets in their portfolio. In total, at the end of last year, 16 Socimis held rental homes in their portfolios, including, in addition to Fidere and Albirana, Vitruvio, VBare, Colón Vivienda and Domo.

In addition to the listed Socimis, other players in the sector include the real estate managers. One of the largest by volume of assets under management is Anticipa Real Estate, owned by Blackstone. Anticipa currently manages 12,000 homes proceeding from banks acquired by the fund during the crisis. Anticipa manages Albirana’s homes, amongst others.

Another star in the rental home manager sector in Spain is Azzam Vivienda – a subsidiary of Azora – which has more than 11,000 homes under management distributed across 140 buildings.

Azora, which will make its debut on the Madrid stock market on 11 May, plans to raise up to €500 million from its stock market debut to co-invest with its partners in various assets, including in the residential sector.

New players

The company founded by Concha Osácar and Fernando Gumuzio in 2003, was managing €1.5 billion in residential assets at the end of last year, which represented 33.4% of its total portfolio. It plans to increase its footprint in the sector to have between €1.3 billion and €1.6 billion under management by 2022 in homes, accommodation for the elderly and assets relating to healthcare.

Despite the increasing prominence of the rental sector, the business is still very fragmented and one of the challenges for the sector is to gain scale in order to compete. Juan Manuel Acosta, CEO of Greystar in Spain, said in an interview with Expansión in February that the US real estate investment firm is looking for opportunities to become one of the largest operators in the residential rental market in Spain.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Ministry Of Development: 22.2% Of Spaniards Rent Their Home

6 July 2017 – Eje Prime

“We are seeing a change in terms of the mentality of Spanish society with respect to the use of homes”, said the Secretary of State for Infrastructure, Transport and Housing, Julio Gómez-Pomar. And that manifests itself in the form of a higher percentage of people living in rental homes: up to 22.2% of Spaniards now live as tenants (rather than owners), up by 5.2% compared to 2012.

That was one of the findings to emerge from the Congress of Deputies’ Commission for Development, when it unveiled the general outlines of the new State Housing Plan 2018-2021, which the Government wants to enter into force on 1 January 2018.

In terms of the rental market, Gómez-Pomar evaluated the impact of the new Urban Letting Act (LAU), approved by the Ministry of Development in 2013. “The LAU is accompanying this change in mentality”, he said.

On the other hand, he rejected the possible approval of measures that would oblige the owners of vacant homes to rent out their properties because “beyond the ideological controversy”, according to the number two at the Ministry of Development “there is a legal limitation, since the constitutional order establishes guarantees with respect to properties, their purpose and the use of them”.

To that end, he defended that “it is better to establish stimulus, incentive and security measures for the rental market to ensure that anyone who puts their home up for rent is not abused and decides not to invest their savings in buying a home again”.

Original story: Eje Prime

Translation: Carmel Drake

Madrid Accounts For 70% Of All New Housing Permits

10 October 2016 – Inmodiario

The Community of Madrid has been boasting to property developers that it represents the real driver of the growth currently being seen in the real estate sector in Spain.

In this way, at the opening of the National Real Estate Conference, the Director of Transport, Housing and Infrastructure, Pedro Rollán, commented on the statistics and highlighted that licences for new residential construction projects in the region increased by 66% during the first five months of 2016, well above the national average increase of 27%.

During his presentation at the conference, organised by the Association of Property Developers and Construction Companies in Spain (APCE), under the title “From recovery to innovation”, Rollán commented that real estate is a strategic sector, whose contribution to GDP is essential for economic growth.

And, to this end, he stated that the sector’s reactivation is necessary to consolidate and strengthen the (overall) recovery. He emphasised the importance of the need to continue working and adapting the (RE) sector to new times, and of innovating to achieve the most accessible, comfortable and least contaminated spaces.

In this sense, the regional Government is managing aid, which will serve to encourage the renovation of homes and the regeneration and refurbishment of urban spaces, thanks to the agreement signed with the Ministry of Development under the framework of the State Housing Plan.

Thus, this year, €14.4 million will be allocated to subsidies for building renovations and €29.8 million will be spent on aid for urban regeneration and renovation.

In the same way, the regional Government is working to create a Single Integrated Assessment Report Register for buildings in the Community of Madrid, which will contain all of the assessment reports relating to more than 40,000 buildings per year.

This register will enable the data obtained to be used to identify weaknesses and deficiencies in the building stock and will help to improve their quality and sustainability, as well as to obtain extensive information to allow policies to be directed appropriately in terms of architecture and housing. All types of buildings may be registered, regardless of their purpose (use) along with the mandatory registration of all buildings that are more than 30 years old.

Moreover, assessments of the degree of conservation of buildings (ITE) are going to be unified into a single document to ensure the safety of all of the buildings in the region; their basic conditions in terms of universal access, to encourage reasonable modifications in this regard; and energy efficiency certifications (CEE) to help achieve the commitment made in terms of energy savings and building sustainability.

Original story: Inmodiario

Translation: Carmel Drake