Sat. Apr 20th, 2019

The real estate sector warns that the new rent decree will bring a rise in incomes | Economy

The real estate sector warns that the new rent decree will bring a rise in incomes | Economy

The new Royal decree law of urgent measures in housing and rental that the Council of Ministers approved this Friday has fallen like a jug of cold water among most companies in the real estate sector, although they celebrate that it does not include measures in favor of limiting the price of rents. It has not left indifferent neither to real estate portals, nor to agencies, nor to large investment funds with tens of thousands of flats for rent throughout Spain.

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For some things or for others, the case is that the new rule, rather less ambitious than it was originally assumed, not pick up the price limitation as claimed by Podemos and give up granting tax benefits in the IBI to landlords who rent at lower prices, almost nobody has liked it.

For Claudio Boada, senior advisor from the US Blackstone fund in Spain, the country's biggest homemaker, "the norm will only bring more tension to the rise in prices in the market and a reduction in supply". The manager believes that the extension of the rent terms, the limitations to the revaluation of the rents (the increases are linked to the IPC during the duration of the contracts) and the reduction of guarantees in the rentals of free rent will suppose that the exit prices offered are higher to adapt to the new decree, which would harm mainly the most affordable leases (below 600 euros).

In addition, the new standard hinders the business of professional rental platforms in Spain "by increasing the terms of rental contracts from three years to seven years (if the lessor is a legal entity) and limiting the possible rent increases to the increases in the CPI, "says Boada. From the US fund criticize that the Executive has changed in less than three months to three times the regulations of the rental market, "which has greatly increased the legal uncertainty of citizens who are owners or tenants of a home," believes Boada. Specifically, four million owners and 10 million tenants operating in the rental market in Spain. "The new norm will lead, as it happened with the previous decree, to a new stoppage of the rental market until its convalidation or disapproval occurs in Congress in the next 30 days," he continues.

In the same critical line is Fernando Encinar, head of studies of Idealista, which criticizes the Government of Pedro Sanchez that has not approved effective measures to significantly increase the offer to moderate prices and that, instead, aims to regulate what the owners have to do "Many of them may be tempted to take their homes out of rent and this is just the opposite of what the royal decree pursues.The discrimination of owners can reduce supply and increase prices and create a black market", indicates

State reference index

Regarding the creation of a state reference index for the rental price of housing within eight months, the real estate portals, which are currently offering the reports on rental prices in the absence of official indexes, believe that it will contribute transparency to the market. But they do not hide their fears. "We are concerned that it could be used to establish limits to the free market, which would be a serious prejudice for many tenants, since the disappearance of the offer would be accentuated and a black market would be created." We have already lived in Spain in the 70s and beyond. recently in Berlin, where the price control did not moderate the rent but it has triggered it to very worrying levels ", says Encinar.

On the other hand, in the Fotocasa portal, they regret that the tax credit of up to 80% of the real estate tax (IBI) has not been included to those owners who rent their homes below the benchmarks. "To improve the supply of housing for rent and at affordable prices, we need tax incentives and now they hardly exist," adds Beatriz Toribio, director of studies at the portal. Toribio believes that "to solve the problem of access to housing for rent in Spain we need more important measures, which involve a greater public-private partnership, a long-term plan to increase the social housing stock, tax incentives and more legal security for tenants and owners ". And for that, he adds, "it is necessary a great agreement of all political forces and have the support of the sector."

A clearly electoralist decree. This is defined by José Ramón Zurdo, CEO of the Rental Negotiation Agency, for whom "the rule goes against the rental market and hides in the background the absence of a social housing policy that can guarantee access to it." Zurdo criticizes that there are already seven legal regimes to regulate housing leases in Spain and that the price index will end up discouraging homeowners from putting their homes on rent, rewarding less suitable homes.

The administrators of farms in Madrid believe that the new standard will produce an effect contrary to that intended by the Government. "It will undoubtedly provoke the withdrawal of the market from the rental of numerous homes and the rise in the price of the same for the lowest incomes.It is the real estate market itself that must regulate the price and that the amount of the rent is determined by the law of supply and demand, "according to the president of the College of Property Administrators of Madrid, Isabel Bajo. However, they consider positive the elimination of the need to register the rental contract in the Property Registry so that it is opposable to third parties.

Some lights

In the midst of so many shadows, some lights come on. In Fotocasa celebrate the return to contracts with a minimum duration of five years (seven for legal persons), because "not only give greater stability to the tenant, but also to the landlord who seeks security and tranquility" and that is limited to two monthly guarantees or guarantee at the time of signing a contract: "The bond is the main tool that owners have in case of default or damage, but as a result of the sharp rise in prices, certain abuses were occurring and was an important barrier for some segments of the population ", according to Toribio.

Ferran Font, director of studies of the portal, also applauds that the new regulation imposes that "the price rises of the rental contracts will be of the IPC obligatorily for all the contracts", unlike the discretionality that favored the previous law .


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