Spain: Fotocasa and Idealista give thoughts on the newly introduced lower rents measure

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This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

The Spanish Ministry of Development plans the construction of 20,000 homes to be rented at limited prices in cities where prices have skyrocketed. Elsa García de Blas reported on the measure in EL PAÍS back in July. The measure, submitted by the socialist parliamentary group, is in conjunction to another collection of proposals, among them, the extended duration of rental contracts from three to five years. Two of Spain’s top real estate portals, Fotocasa and Idealista, understand that the measures are positive in general, although with nuances. “All the initiatives that are proposed to promote the rental market are welcome,” says Fernando Encinar, Head of Estudios de Idealista. “Spain needs a more balanced and more professionalized rental market, currently it is in the hands of the owners”, underlines Beatriz Toribio, head of Estudios de Fotocasa.

Regarding the construction of 20,000 homes for rent, both portals agree that it is a wise decision because it increases the supply of available housing, one of the main problems of the increase in rental prices, but they add several disadvantages. “We are very afraid that they will reach the market when the problem no longer exists The regulatory processes to build houses are increasingly complex and long precisely in the areas of action where the Government wants to influence: Madrid, Barcelona, the archipelagos …” explains Encinar. A disadvantage to which Toribio also adds, recalling that the number of homes advertised “is not enough” and that to apply this measure is necessary maximum cooperation between local, regional and state administrations. “So far they are not liberalizing land so that more housing can be built.”

As for the rest of the measures, Idealista stresses the suitability of extending the duration of the rental contract from three to five years, an initiative that had already been claimed from the portal. “Many are proposals that we at Idealista have already launched, specifically, the recovery of the five-year term for rental contracts and the creation of tax incentives to bring more empty homes to the rental market,” explained Encinar. “Giving tax advantages to owners who rent these homes at affordable prices but without punishing, but encouraging recommended prices is positive,” says Toribio, who points out that this also encourages rental contracts to be outside of the submerged economy.

As for what remains to be done, both Encinar and Toribio provide several proposals. Fotocasa insists there is a need to encourage social rent. “Spain is in the queue in Europe in the social housing stock, we only have 2.5% compared to 17% in France”, underlines Toribio, who also believes that it is important to guarantee more legal security not only for tenants, but also to the owners, so that they choose to rent their empty homes. Regarding the offer of public rental housing, in Idealista they are more prone to a system similar to Milan. “With nearly 30,000 homes available in the Idealista system, now orienting its social housing policy towards a public-private partnership,” explains Encinar. The Head of Estudios de Idealists agrees on the need to create stable and reliable regulatory, legal and fiscal frameworks that encourage the thousands of owners of these empty houses to rent them. “Only increasing the supply can alleviate the growth of the prices”.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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Simon Baker is the Founder and Executive Chairman of Online Marketplaces and Property Portal Watch. Involved with property portals for 15 years, he’s a well-recognized expert and industry consultant.
As former CEO/MD of the REA Group for 8 years, Simon led the group to its current market-leading position. When he joined REA Group in 2001, it had $4m in revenues, $6m in losses and an $8m market cap.
By 2008, the company presided over $155m in revenues, $35m in EBITDA and enjoyed a peak market cap of $1b. Simon is currently Chairman of the Mitula Group and Real Estate Investar and a serial portal founder and, investor.