Small homeowners plan to remove 108,500 homes from the rental market (11.7% of those that are currently rented in Spain) due to the impact of the new Housing law, according to a study prepared by the Tecnocasa Group and the Universitat Pompeu Fabra (UPF) and presented this Wednesday. José García-Montalvo, professor at UPF and coordinator of the report, has highlighted that a large part of this impact will occur even if the new law is not finally applied, due to the psychological impact that its debate and the insecurity experienced by the sector has had on the owners.
The study, carried out on the clients of the 850 offices of the Tecnocasa network, indicates that the limit on rents in stressed areas (22%) and legal uncertainty (66.3%) are the two causes most alleged by the owners who wish to stop renting, while the impossibility of having the CPI reflected in the rent is the reason given by 11.8% of the owners.
According to the Tecnocasa study, the departure of the homes will occur when the rental contracts that are currently in force end: 7.7% of the owners plan to sell the home, while 4% will look for other options, such as renting it with uses other than housing. Lázaro Cubero, Director of Analysis of the Tecnocasa Group, recalls that in cities like Madrid or Barcelona, with a large percentage of floating population, there are rental options for students or for short periods.
The greatest reductions in the housing supply would occur in Toledo and Guadalajara, with more than 15%.
In the city of Barcelona the supply would be reduced by 12.6% (24,090 fewer properties) and in Madrid by 11.3% (43,113 fewer properties). By district, the most affected areas would be Barcelona's Eixample, with a decrease in supply of more than 16%, and the center of Madrid, with a reduction of 14.6%.
Montalvo has pointed out that the sale of these homes may also have an additional impact by accelerating gentrification, as has happened in San Francisco. "Rental income of 2,500 euros/month can be paid by local professionals, but the purchase of these homes, with the current mortgage conditions, is only accessible to international managers."
Cubero has highlighted that in the two capitals the reasons why the owners decide to leave the rental market vary a lot. Thus, while in Madrid it is mainly due to legal insecurity (70.9%), in Barcelona it is due to the limit on income in stressed areas (63%).
The Tecnocasa study has been carried out only with private owners, since the group does not work with large holders. The profile of the owners who rent with Tecnocasa is a person over 55 years of age (37.7%), with university studies (40.4%), with a permanent job (55.15%) and of Spanish nationality ( 92.51%). They have between one and three rented houses, he points out. “In many cases they are professionals who moved to another apartment when they had children and instead of selling their first apartment they rented it out and with the rent they pay the mortgage. Pensioners (27% of our owners) tend to have the apartment paid instead and use the income to complement the pension”.
The reduction in the rental offer has been taking place for three years: it has become 9.04% of the properties in the firm's portfolio, compared to 11.9% two years ago, with an even greater drop in Barcelona (from 19.2% of its real estate offer to only 13.71%).
García-Montalvo stressed that the reduction in the rental market will be even greater than what this study reflects due to the homes that will no longer be incorporated into the market. Thus, the firm has analyzed the net rental profitability in the main capitals, which is around 4%, with 4.5% in Madrid and 3.9% in Barcelona. “Treasury bills are yielding 3.89%, with all the security of collecting, and without unforeseen events such as damage and repairs. Hardly anyone will invest their savings in renting being able to obtain such high and safer alternative returns”.
