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Regulation and rental market in Spain: due to lack of supply, they propose copying Milei's DNU - Infobae
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www.infobae.com
October 09, 2024
As happened in Argentina until the repeal of the rental law in 2020, last year's "Law for the Right to Housing" caused many owners to stop offering their properties. What are the values per m2 in Madrid, Barcelona and other cities?
By Jose Luis Cieri
Image of Gran Via in Madrid, capital of Spain, where a 2-bedroom apartment costs more than 900 euros per month on average
The problem of access to housing is a global challenge amid regulations and changes that generate distortions that make it difficult to access a home.
For example, the new rental legislation in Spain, known as the Law for the Right to Housing No. 12/2023, sparked an intense debate, due to its counterproductive effects on the real estate market. Something similar happened in Argentina with the Rental Law of 2020, which caused an unprecedented shortage of supply and a price increase above inflation. Since the current government repealed this regulation, supply has grown significantly in major cities such as Buenos Aires, where the average increase is 180% since the beginning of the year , and prices began to gradually stabilize.
In Spain, the law passed in May 2023 was compared to local regulations and also caused a drastic decrease in the supply of rental housing. Owners reject it, while tenant entities and groups defend it.
Enrique Abatti , a lawyer specializing in real estate law and president of the Argentine Chamber of Property Owners (CAPRA), said that the new regulations caused “the disappearance of the supply due to the great distrust of the owners,” who withdrew their properties from the rental market.
“The current law in Spain modifies the Urban Leasing Law (LAU) of 1964, reformed in 1995 and 2013, with the aim of generating changes in the rental market. However, as occurred in Argentina, the new regulations resulted in a drastic reduction in the rental supply, since many owners decided to withdraw their properties due to the uncertainty generated by the regulation,” said Abatti.
Aerial view of Gran Via Boulevard in Madrid (REUTERS/Guillermo Martinez)
Ival Rocca (h.) , vice president of the Argentine Center for Real Estate Law and Horizontal Property, added that one of the most notable consequences was the “disappearance of the offer of long-term rentals,” which has been replaced by rentals for tourist purposes.
“This not only left many potential tenants without housing options, but also increased the prices of the few homes available, creating greater uncertainty in the real estate market,” Rocca added.
Many properties were withdrawn from residential rental and allocated to tourist rentals, which are not as regulated. With the arrival of 50 million tourists a year, owners are prioritising temporary contracts, affecting families looking for long-term rentals.
According to Enrique Abatti (h.) , this legislation has an electoral and populist purpose, as occurred in Argentina. “It is difficult to believe that the promoters of these measures ignored the negative effects that had already been warned by representatives of the sector. The new regulations discourage traditional rentals, due to the requirements of minimum terms of five or seven years, depending on whether the owner is a natural person or a legal entity, which favors tourist rentals,” he said.
“As a result, the supply of permanent rentals fell by 17%, while the supply of temporary rentals grew by 55% year-on-year, reaching 12% of the market. In Barcelona, 30% of rentals correspond to tourist destinations and in Madrid, 15%, according to specialized portals,” added Abatti (h.).
The law that regulates housing in Spain also offers tax benefits for owners who facilitate access to affordable units (Illustrative Image Infobae)
The most expensive cities to rent were Barcelona, at 27.77 euros per m2, and Madrid, at 23.52 euros, while the cheapest included Jaén, at 6.70 euros, and Ciudad Real, at 6.90 euros per m2. The Balearic Islands, at 18.41 euros, was the region with the highest monthly increase (2.57%), with the year-on-year rise also standing out in the Canary Islands, at 27.07 percent.
Ferran Font , director of studies at Pisos, stressed that the increase in rent prices is frustrating those who are looking to become independent or improve their housing. “The economic situation is forcing society to delay their life plans, since it is not only difficult to cover the monthly payments, but also to comply with the required guarantees, such as guarantors and guarantors,” he said.
Font warned that government aid, although it provides temporary relief, can lead to an artificial increase in rents. Without incentives for developers to build housing, subsidies only delay the solution. In addition, “finding rentals is a challenge due to high prices, limited supply and lack of competitiveness, which affects the formation of new households.”
José Rozados of Reporte Inmobiliario agrees with this view, highlighting that the law in Spain or anywhere else in the world “has not achieved its objective of controlling rental prices. They continue to rise above inflation rates. The reduction in the supply of long-term rentals has been especially significant in cities such as Barcelona, which saw the implementation of maximum prices in areas designated as stressed,” he said.
View of Barcelona, the city with the most expensive m2 of rent in Spain (Photo: David Zorrakino / Europa Press)
Concern also spread to the Chambers of Urban Property and the Associations of Real Estate Agents of Spain.
Rocca (h), in his analysis, stressed that these entities “are extremely concerned because legislating behind the backs of the owners ends up destroying the market.” They are making efforts to modify the current legislation with the aim of alleviating the damage caused to tenants and improving accessibility to housing for the most disadvantaged families.
Abatti said that authorities from the Confederation of Chambers of Urban Property and the Official College of Property Administrators of Galicia held meetings with CAPRA to discuss possible changes to rental legislation in Spain.
“During these meetings, ideas were exchanged about a future reform inspired by Argentina’s DNU 70/2023. This Milei regulation is a global example, since by prioritizing contractual freedom, it increased the supply of rental housing, allowing tenants to negotiate fairer prices. This flexibility encouraged investments and energized the market, making it an attractive model to be implemented in other countries, such as Spain,” said Abatti.
Before the law was passed in Spain, they tried to raise their concerns about how the regulations would reduce the supply of rentals, especially affecting the formal market. These institutions stressed that greater intervention in contracts would not solve the problems of access to housing.
To balance the market, Rozados believes that rental legislation is not enough, but that economic policies that encourage investment, favourable taxation and access to financing are needed.
“Unlike Argentina, Spain has the advantage of a banking system that facilitates mortgages, with lower purchase rates than rents. However, he warns that if regulation continues to discourage investment in rental housing, prices will continue to rise, as is already happening in areas of Madrid, where they vary between 24 euros per m2 in Salamanca and 13 euros per m2 in Villa de Vallecas,” concluded Rozados.
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Source:
Regulación y mercado de alquileres en España: ante la falta de oferta proponen copiar el DNU de Milei
Como pasó en la Argentina hasta la derogación de la ley de alquileres de 2020, la “Ley por el Derecho a la Vivienda” del año pasado hizo que muchos propietarios dejen de ofrecer sus inmuebles. Cuáles son los valores por m2 en Madrid, Barcelona y otras ciudades
www.infobae.com
October 09, 2024
As happened in Argentina until the repeal of the rental law in 2020, last year's "Law for the Right to Housing" caused many owners to stop offering their properties. What are the values per m2 in Madrid, Barcelona and other cities?
By Jose Luis Cieri
Image of Gran Via in Madrid, capital of Spain, where a 2-bedroom apartment costs more than 900 euros per month on average
The problem of access to housing is a global challenge amid regulations and changes that generate distortions that make it difficult to access a home.
For example, the new rental legislation in Spain, known as the Law for the Right to Housing No. 12/2023, sparked an intense debate, due to its counterproductive effects on the real estate market. Something similar happened in Argentina with the Rental Law of 2020, which caused an unprecedented shortage of supply and a price increase above inflation. Since the current government repealed this regulation, supply has grown significantly in major cities such as Buenos Aires, where the average increase is 180% since the beginning of the year , and prices began to gradually stabilize.
In Spain, the law passed in May 2023 was compared to local regulations and also caused a drastic decrease in the supply of rental housing. Owners reject it, while tenant entities and groups defend it.
Enrique Abatti , a lawyer specializing in real estate law and president of the Argentine Chamber of Property Owners (CAPRA), said that the new regulations caused “the disappearance of the supply due to the great distrust of the owners,” who withdrew their properties from the rental market.
“The current law in Spain modifies the Urban Leasing Law (LAU) of 1964, reformed in 1995 and 2013, with the aim of generating changes in the rental market. However, as occurred in Argentina, the new regulations resulted in a drastic reduction in the rental supply, since many owners decided to withdraw their properties due to the uncertainty generated by the regulation,” said Abatti.
How it works and consequences
The Right to Housing Act in Spain introduced several measures to regulate the rental market, seeking to contain prices and increase the supply of affordable housing. The law allows autonomous communities to declare areas of stressed market (there are cities, such as Barcelona, that also have local regulations), where annual increases are limited and a reference index is established to avoid disproportionate increases. Large landlords will not be able to set new prices higher than the index, while small landlords will have to follow an annual update limit.
Aerial view of Gran Via Boulevard in Madrid (REUTERS/Guillermo Martinez)
Ival Rocca (h.) , vice president of the Argentine Center for Real Estate Law and Horizontal Property, added that one of the most notable consequences was the “disappearance of the offer of long-term rentals,” which has been replaced by rentals for tourist purposes.
“This not only left many potential tenants without housing options, but also increased the prices of the few homes available, creating greater uncertainty in the real estate market,” Rocca added.
Many properties were withdrawn from residential rental and allocated to tourist rentals, which are not as regulated. With the arrival of 50 million tourists a year, owners are prioritising temporary contracts, affecting families looking for long-term rentals.
According to Enrique Abatti (h.) , this legislation has an electoral and populist purpose, as occurred in Argentina. “It is difficult to believe that the promoters of these measures ignored the negative effects that had already been warned by representatives of the sector. The new regulations discourage traditional rentals, due to the requirements of minimum terms of five or seven years, depending on whether the owner is a natural person or a legal entity, which favors tourist rentals,” he said.
“As a result, the supply of permanent rentals fell by 17%, while the supply of temporary rentals grew by 55% year-on-year, reaching 12% of the market. In Barcelona, 30% of rentals correspond to tourist destinations and in Madrid, 15%, according to specialized portals,” added Abatti (h.).
Increases
Regulation and the economic context pushed up year-on-year values, according to Pisos, a Spanish real estate platform. In August 2024, the average rental price was €11.85 per square metre, representing an increase of 8.22% year-on-year.
The law that regulates housing in Spain also offers tax benefits for owners who facilitate access to affordable units (Illustrative Image Infobae)
The most expensive cities to rent were Barcelona, at 27.77 euros per m2, and Madrid, at 23.52 euros, while the cheapest included Jaén, at 6.70 euros, and Ciudad Real, at 6.90 euros per m2. The Balearic Islands, at 18.41 euros, was the region with the highest monthly increase (2.57%), with the year-on-year rise also standing out in the Canary Islands, at 27.07 percent.
Ferran Font , director of studies at Pisos, stressed that the increase in rent prices is frustrating those who are looking to become independent or improve their housing. “The economic situation is forcing society to delay their life plans, since it is not only difficult to cover the monthly payments, but also to comply with the required guarantees, such as guarantors and guarantors,” he said.
Font warned that government aid, although it provides temporary relief, can lead to an artificial increase in rents. Without incentives for developers to build housing, subsidies only delay the solution. In addition, “finding rentals is a challenge due to high prices, limited supply and lack of competitiveness, which affects the formation of new households.”
Change
In Italy, property owners also pointed out that the DNU that modified the way of entering into free agreements between parties in Argentina seeks to be replicated, since this country also faces similar problems in access to housing .José Rozados of Reporte Inmobiliario agrees with this view, highlighting that the law in Spain or anywhere else in the world “has not achieved its objective of controlling rental prices. They continue to rise above inflation rates. The reduction in the supply of long-term rentals has been especially significant in cities such as Barcelona, which saw the implementation of maximum prices in areas designated as stressed,” he said.
View of Barcelona, the city with the most expensive m2 of rent in Spain (Photo: David Zorrakino / Europa Press)
Concern also spread to the Chambers of Urban Property and the Associations of Real Estate Agents of Spain.
Rocca (h), in his analysis, stressed that these entities “are extremely concerned because legislating behind the backs of the owners ends up destroying the market.” They are making efforts to modify the current legislation with the aim of alleviating the damage caused to tenants and improving accessibility to housing for the most disadvantaged families.
Abatti said that authorities from the Confederation of Chambers of Urban Property and the Official College of Property Administrators of Galicia held meetings with CAPRA to discuss possible changes to rental legislation in Spain.
“During these meetings, ideas were exchanged about a future reform inspired by Argentina’s DNU 70/2023. This Milei regulation is a global example, since by prioritizing contractual freedom, it increased the supply of rental housing, allowing tenants to negotiate fairer prices. This flexibility encouraged investments and energized the market, making it an attractive model to be implemented in other countries, such as Spain,” said Abatti.
Before the law was passed in Spain, they tried to raise their concerns about how the regulations would reduce the supply of rentals, especially affecting the formal market. These institutions stressed that greater intervention in contracts would not solve the problems of access to housing.
To balance the market, Rozados believes that rental legislation is not enough, but that economic policies that encourage investment, favourable taxation and access to financing are needed.
“Unlike Argentina, Spain has the advantage of a banking system that facilitates mortgages, with lower purchase rates than rents. However, he warns that if regulation continues to discourage investment in rental housing, prices will continue to rise, as is already happening in areas of Madrid, where they vary between 24 euros per m2 in Salamanca and 13 euros per m2 in Villa de Vallecas,” concluded Rozados.
www.buysellba.com
