MADRID – The Spanish real estate sector has called the new housing law measures ‘unachievable’ and ‘unfair’. But they were approved by the government on Wednesday, and will only create ‘more confusion’ in an already ‘unbalanced market’.
The real estate companies also find it “unfair” that companies with more than 10 properties are considered large holders. Therefore, José María Alfaro, General Coordinator of the Federation of Real Estate Associations (FAI), spoke to RTVE.es. She said, “we need to create more offers instead of changing the rules of the game”.
For others, the law violates “the basic principles of property and the rights every owner has to do as he pleases with his property,” in the words of Lorena Sagarra, of API Fincas Ideal in Zaragoza, in statements to TVE.
High demand, little supply in the real estate sector
FAI President, José María Alfaro, sees the ‘imbalance’ between supply and demand in cities as the source of the problem. Many people are looking for apartments, and few are renting out their apartments. Also, the situation worsened with the Urban Rental Act amendment, which, according to the sector, limited tenants’ guarantees and suretyships.
“Homeowners are forced not to rent, or sell, or be much more selective about who they rent to,” he says. Alfaro refers to the time limits, established in Spanish law, necessary to evict in the event of default or non-payment.
Similarly, the Federation of Real Estate Associations criticises the lack of clarity of some key concepts in the new Housing Act. Because what will be considered ‘stressed area’ or who exactly are those big owners who have to lower prices? “We disagree that a company that has more than 10 properties should be classified as a large holder. It is very unfair because in between there are also small family businesses. They own and manage properties after many years of hard work in real estate,” explains Alfaro.
The government estimates that about 150,000 flats are owned by major owners set up as legal entities. Only 34 entities (including banks, funds, insurance companies, and corporations) manage 110,000 of these properties. This represents 4.2% of the total supply, according to a report by Atlas Real Estate Analytics.
‘Experiments’ with counterproductive effects
Alianza Sevilla uses the experiences of Germany and France with price control to show the ineffectiveness of the measures. “It is possible to reduce the rent very little, between 4% and 8%. But the supply of apartments will then be drastically reduced,” says chairman Antonio Segura. “The lower supply and higher demand then results in a new increase in the rent”.
Along the same lines, from the Idealista real estate portal, they see the law as “bad news” for people looking for a flat and a “serious mistake” that will affect an entire decade. “The control of rents in Barcelona has led to 40% of the available supply in the city disappearing and citizens already having a very hard time finding a rental property in the city,” said spokesman Francisco Iñareta.
The Association of Real Estate Promoters in Madrid (ASPRIMA) also underlined in a statement what it believes are the counterproductive effects of “experiments” such as the housing law: reduction of supply, legal uncertainty, displacement of domestic and foreign investment, the appearance of an underground economy…
“Companies that invest and create jobs in the sector will be harmed with this law,” says the organisation led by Juan Antonio Gómez-Pintado.
‘Supply must be bigger’
“The best way to lower prices is to significantly increase the supply, for which it is necessary to implement policies that encourage the construction of more houses on the market,” said Francisco Iñareta, spokesperson for Idealista.
Similarly, the Federation of Real Estate Associations likes to reward owners who put properties on the rental market without exceeding certain prices and ask for an autonomous arbitration to speed up eviction periods in the event of non-payment or default.
Tenants: “The law is clearly insufficient”
The announcement of the government housing pact also provoked reactions on the part of tenants. “For us, it is clearly insufficient. The central government must be brave and include in the law some areas that are clearly to be emphasised. And not leave to the autonomous communities,” says Ricardo Arnedo, spokesman for the Tenants Union, Zaragoza in statements to TVE.
Finally, the bonuses for small owners do not convince the association for tenants, as they reward households with the highest income. For example, “tax breaks as a condition of reducing rent by 10% would be profitable for landlords receiving income.