Tourist Rental Homes Generate Almost €14,000M In 2 Years

10 July 2017 – Expansión

HomeAway, one of the main tourist rental home companies, estimates that the economic impact generated by this activity in Spain during the period from June 2015 until June 2017 amounted to almost €14,000 million. That amount exceeded the impact generated during the previous two-year period by €2,824 million, when it amounted to €11,120 million, according to the IV Holiday Rental Barometer in Spain, compiled by HomeAway.

The use of tourist homes has increased by 25% in the last two years, given that they were used for more than 22 million visits.

On Thursday, the professor of Marketing at the University of Salamanca and author of the study, Pablo Muñoz, highlighted the consolidation in the sector amongst clients, given that 32.6% of those surveyed use both hotels and tourist apartments, depending on their requirements. 61% of the people surveyed only ever stay in hotels.

The report reveals that the users who stay in these types of homes spend more during their stay (€477) than guests who sleep in hotels (€331). The Director General of HomeAway in Spain, Juan Carlos Fernández, underlined that this economic impact is reflected, in particular, in those businesses located close to tourist homes.

On the other hand, HomeAway confirmed that its legal team is analysing a draft bill that is being promoted by the Ministry of Finance to analyse “the extent to which a national Administration has the power to request data about users” and to establish its position before communicating it to the Tax Authority.

Collaboration

The Communications Director at HomeAway, Joseba Cortázar, said that “HomeAway is open to collaborating with the Tax Authority to provide greater transparency in terms of tax collections”. And he reiterated that the veto of neighbouring communities is a possibility that is already reflected in the Horizontal Property Law: “This activity cannot be carried out if the community bylaws prohibit it”.

Original story: Expansión (by Miriam Vázquez)

Translation: Carmel Drake

Madrid’s Town Hall Prepares To Legislate For Tourist Apartments

30 April 2017 – El Confidencial

The Town Hall of Madrid has decided to take the lead regarding the problem of the proliferation of tourist homes in the capital. Although it lacks the power to introduce legislation (that responsibility lies with the Community of Madrid), the Town Hall’s Councillor for Sustainable Urban Development is working towards signing a Memorandum of Understanding with Airbnb, and the other platforms that operate in the city, to try to put some order to a situation that isn’t showing any signs of letting up. (…).

José Manuel Calvo (pictured above), Councillor for Sustainable Urban Development, plans to have the agreement ready before the end of this legislature.

Specifically, there are three measures that the Town Hall of Madrid is hoping to extrapolate from an example that it has been studying in Amsterdam. The first is “to establish a maximum period of time, be it 60 days, 120 days, etc, that an owner may lease his/her property (home/room) for each year and for the platform to withdraw the property in question from its website, once that quota has been reached, until the following year”.

The second measure involves ensuring that only the owner of a property may lease it out, whereby preventing the involvement of any companies. This will allow “people who need to supplement their mortgage payments, or who need to lease their house to make ends meet, to continue to let out their homes/rooms, but it prevents people from creating tourist accommodation companies without paying taxes, or complying with legislation, etc”.

The crux of the agreement comes in the third measure: “we are considering a tourist tax for tourist homes only, not for hotels, given that hotels already pay taxes, fees, fulfil their obligations etc. Meanwhile, tourist homes do not currently pay any taxes. In other Central European cities, and even in some American cities, some of the landlords’ profits are reinvested in the town, in agreement with the operators”, said Calvo.

With this new revenue stream, the Town Hall could finance the systems of control that it plans to implement to verify that Airbnb and its competitors are complying with the agreed conditions.

But the problem of the touristification or gentrification of the centre of Madrid goes beyond the tourist homes and also affects the proliferation of hotels, to the detriment of residential buildings; another challenge that Calvo wants to tackle by limiting changes of use. (…).

Although he acknowledged that “Madrid faces a very different situation in terms of hotels to Barcelona, Venice and Lisbon (we have 2.7 beds for every 1,000 inhabitants, compared to 8 in Barcelona)”, he also admits that he is worried by the degree of saturation that is starting to be seen in certain neighbourhoods in the centre, where limits do need to start being imposed (…).

“Madrid undoubtedly still has the capacity to increase its hotel and tourist capacity, but, the question is whether that should all be concentrated in the centre, in the same neighbourhoods, where the residential fabric is being pushed out by the increase in hotels and tourist apartments? We don’t think so, we need to diversify. Ideally, they would go towards the Arganzuela district, towards Chamartín, towards Chamberí, to the outskirts, to the other side of the M-30…”.

And it was on this point that Calvo was most belligerent, going as far as to state that he would be willing to set thresholds, to establish limits in those areas where saturation is detected. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Bank Of Spain: Average Housing Yield Amounts To 8.8%

30 April 2017 – Expansión

Housing is still one of the most profitable investments. The net return from buying a home to put it on the market to rent, now amounts to 8.8% on average. That is according to data from the Bank of Spain, which takes into account not only income from the rental of properties, but also the annual appreciation in their values. In other words, if the rental of a home generates an income of 4.4% and the price rises by 5% in twelve months, then its total return would be 9.4%. And that represents an attractive yield, well above the rates being offered on debt and deposits. Moreover, in some places, the real estate market is offering even higher returns.

To this end, Expansión has identified the districts in Spain’s five largest cities where investors can earn more than 10% from buying a home. And the conclusions are clear: 9 out of the 10 districts in Barcelona and 12 of the 21 districts in Madrid already exceed that percentage. In Valencia, 10 of its 19 districts generate returns of more than 10%; in Sevilla, only 1 out of 11; and in Zaragoza, 4 out of 12.

The most profitable districts are concentrated in the Catalan capital, above all due to the very high appreciation in property values there. Ciutat Vella leads the ranking with 27.7%, followed by Eixample (22%) and Horta-Guinardó (20.5%). That same percentage is also being generated in the Madrilenian district of Hortaleza (20.5%), which is not one of the most selective neighbourhoods, but, prices are rising quickly there nevertheless. It is followed by the Centro district of the Spanish capital (19.8%). Following those five, the ranking continues with Rascanya (Valencia) and Tetuán (Madrid), both with a gross annual return of 18.9%.

In the most exclusive neighbourhood of Madrid (the district of Salamanca) the figure is 13.9%. In Sarrià-Sant Gervasi (Barcelona), the average return is 9.8%. Other prime locations such as Chamartín (14.6%) and Gràcia (17.9%) are also very attractive. (…).

“The increase in returns in the city centres is happening due to a cocktail of senior boomers (the generation born in the 1960s) returning to the city centre and the huge boom in tourist rental properties”, said José Antonio Pérez, Director at the Real Estate Practice of the ‘Instituto de Práctica Empresarial’. That means that “now is a good time to buy a small flat or a small building to turn it into apartments for tourists”, said Pérez. (…).

But, investors should not limit themselves only to the large cities to find attractive investments. “Savers should also buy tourist homes in areas along the coast where there is already a lot of demand, or in peripheral areas of large cities that are well connected or in university areas”, advised Pérez.

The recovery in the residential sector is spreading out across the whole country. Slowly and unevenly, but it is happening. (…).

According to Jorge Ripoll, Director of Research at Tinsa, “The best prospects for investment in housing are located in established areas with active markets that are clearly recovering, such as those in Barcelona, Madrid, Málaga, Valencia, San Sebastián and Bilbao, for example”. They are areas “where asset prices are rising and where there is solvent demand for primary residences from those who cannot afford to buy a home due to their inability to have been able to save in the past”, he said.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Risk Of A Bubble In The Rental Home Market?

4 November 2016 – El Mundo

The rental sector stopped being the bad guy the movie about the residential market a long time ago. Following the burst of the real estate bubble in 2008,  this option for accessing a home (so vilified in previous decades and so closely linked to numerous prejudices in a country where the ownership culture was deeply entrenched) quickly became an attractive an option. Its popularity has been so great that rental housing now accounts for more than 20% of the residential stock and that figure is on the rise. So much so, there are now concerns in the sector about the risk of a bubble.

The EU office for statistics, Eurostat, states that the percentage of the Spanish population living in rental homes now amounts to 21.8% and Spain’s National Institute for Statistics (INE), in its Continuous Household Survey for 2015, said that the figure amounts to 22.7% – the percentage is even higher in major cities such as Madrid and Barcelona -. If we look at this with some perspective, we see that the number of tenants has soared since 2007, when they accounted for just 6% or 7% of all dwellings.

Although perhaps most importantly, beyond the numbers, is the change in attitude towards renting. Nowadays, the hackneyed expression that renting is throwing money down the drain is no longer heard, and Spain is becoming more European in this sense. Currently, the national percentage of renters in Spain is higher than in Norway (17.2%) and is getting close to the levels seen in Portugal (25.1%), Greece (26%), Italy (26.9%), Belgium (28.6%) and Sweden (30.7%). Nevertheless, it is still a long way below the level in Switzerland, where more than half of inhabitants rent their homes (55.5%) and Germany (47.5%) (…).

Meanwhile, Servihabitat has published the first indicator that points to a boom. According to a study by the servicer’s investigation and market analysis platform, the average rental price is expected rise by more than 10% in 2016. Moreover, in the provinces of Málaga, Barcelona, Gerona and Alicante and in the uniprovincial communities of the Balearic Islands and Madrid, rental price increases are expected to exceed the average.

One of the most qualified people to talk about this situation in the rental segment is the firm Alquiler Seguro, which was established in 2007 and which nowadays brokers and manages tens of thousands of rental contracts all over Spain. The President of the company, Gustavo Rossi, acknowledges that the risk of a bubble does exist, above all, in the major cities and in the most touristy areas. “In those enclaves, the supply is insufficient for the demand that exists and, therefore, we see bull markets, with rental prices on the rise. If demand continues to grow and supply continues to stagnate, then we may see a price bubble”, he warned. Nevertheless, he points out that this possible bubble “would not be anything like the one seen with owned properties, when the construction sector stopped focusing on housing needs and took decisions based purely on speculation targets.

Antidotes to avoid the boom

To avoid the threat of a boom, Rossi advocates reactivating the supply, both from individuals as well as from property developers and investors. “The first step would be to put closed housing on the market and regulate the high flow of tourist homes”, he suggests. Similarly, he argues that “we should advance more in the professionalization of the sector to allow owners to lose their fear of renting. He also supports the need for Local Governments to commit to the rental sector “by creating specific courts to rapidly resolve conflicts and boost tax benefits for both owners and tenants, preferably via the income tax framework, and at the same time bring those rents that are submerged in the black market up to the surface”.

The forecasts for rental price increases are starting to cause problems, especially for renters. Currently, good tenants (those who pay on time), so sought after in recent years, are no longer the treasures they once were because the demand for quality is increasing. Some landlords, aware that rental prices are rising, are becoming increasingly less flexible and harsh with their current tenants, for example, when it comes to signing tacit contract renewals or granting ad hoc requests. (…).

In terms of prices, Servihabitat estimates that the average rental cost in Spain amounts to €540 for a home measuring 80m2 to 90m2, with significant variations depending on the autonomous region. In this way, the most expensive average rents are charged in the Balearic Islands (€980/month), the Community of Madrid (€940), Ceuta (€880) and País Vasco (€840), whereas the cheapest rents are paid in Galicia (€280), Extremadura (€370) and Castilla-La Mancha (€380). The servicer also identifies the trend in rental prices, which it describes as increasing in every autonomous region with the exception of Extremadura, Castilla-La Mancha, Navarra, Asturias and Ceuta and Melilla, where prices are stable. (…).

Original story: El Mundo

Translation: Carmel Drake

Only 12,000 More Hotel Beds May Be “Opened” In Barcelona

11 March 2016 – Expansión

Yesterday, the government of the mayoress, Ada Colau, approved the Special Urban Plan for Tourist Accommodation (Peuat), which will prohibit the opening of more tourist apartments in Barcelona; will limit the opening of new hotels to areas beyond the centre of the Catalan capital; and will allow the “opening” of just 12,000 more (hotel) beds across the city as a whole.

According to the Town Hall, the objective of this indefinite moratorium (which will be reviewed every six years) is to put an end to the problems caused by tourist congestion in the centre of Barcelona and the difficult coexistence of tourist apartments and conventional homes. The regulations will be implemented by area, and the centre of Barcelona will face the greatest restrictions. The legislation will be more relaxed the further away from the centre you go.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

INE: House Sales Accelerate Overall And Fall In 4 Regions Only

9 March 2015 – Cinco Días

The recovery in house sales is strengthening slowly, month after month, according to the statistics prepared by the National Institute for Statistics (INE) – refer to article published on Friday for high level data. (….).

(….). The sale of second-hand homes accounted for 73.1% of all sales recorded in January, whilst the sale of new homes accounted for 26.9% of transactions, heavily influenced by the scarce construction of developments that still afflicts the market. During the first month of the year, just 9,003 new homes were sold, 37.1% fewer than 12 months earlier.

Unsubsidised housing

As INE highlights in its notes, the data released on Friday relates to sales recorded in property registries for transactions closed in the months leading up to the month of January. In any case, even through there is a certain timelag, the statistics prepared by the notaries and the Ministry of Development (using the figures of the former), which lack this mismatch in terms of dates, show exactly the same trend towards a clear increase in the volume of sales. The recovery of employment and the re-opening of the funding tap, together with significantly lower prices, explain the increased volume of transactions.

By type of home, the majority of the homes sold during the first month of the year, specifically 88.8%, were unsubsidised. The sale of this type of home increased by 10.4% in year-on-year terms, to amount to 29,667 transactions. By contrast, 3,749 subsidised (VPO) homes were sold during the month, an increase of 3.3% with respect to January 2014. Another way of assessing whether this recovery is sustainable or not is to look at how this trend is evolving across the country. Although at first, only a minority of autonomous regions recorded positive annual rates in terms of house sales (those with a higher income per capita and with a higher percentage of tourist homes), now the situation has turned around (with only a minority of autonomous regions recording negative annual rates). In absolute terms, Andalucía continued to lead the ranking in terms of house sales in January, with 6,114 transactions, followed by Madrid (5,282), Cataluña (5,219) and Valencia (4,630).

Nevertheless, in relative terms, the regions that saw the highest increases in house sales were the Canary Islands (+56.7%), La Rioja (+48.3%) and Extremadura (+30%). Only four regions recorded annual decreases: Cantabria (-17.3%), Navarra (-17.2%), Galicia (-7.3%) and Castilla-La Mancha (-3.9%)

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake