Spain’s real estate agencies warn that the lack of affordable, accessible housing in the country is creating a “social drama” that will only get worse in the near future.
A study on rental housing by the National Federation of Real Estate Associations (FAI) has found that the country’s rental housing stock has dropped by 30.5% in the last six months, further driving up demand and prices in a country already low on affordable housing.
Driving the disparity between supply and demand is the country’s Housing Law, which went into effect at the end of May.
The Housing Law, as it is best known, approved by Spain’s leftist-controlled Congress of Deputies on April 27th, contains about ten measures designed to improve the lack of affordable housing.
Among other measures, the Housing Law caps rent increases at 3%, makes the process of evicting a renter for non-payment of rent longer, and allows for greater government intervention in neighborhoods where the housing market is deemed “stressed.”
The FAI study shows the initial effects of the law on the housing market. In the period from late May until mid-October, demand for long-term rental properties increased by 11%, while rental prices have increased on average by 9.2% in the last 12 months.
Since the new Housing Law went on the books in late May, rental management operations in real estate agencies have fallen by almost 29%.
The FAI also found that 25.8% of the agencies consulted in a survey said that landlords are tightening requirements for potential tenants and that 19.7% have chosen to raise income requirements due to the risk of non-payment. Additionally, 15.4% of agencies responded that property owners are moving their homes to the temporary rental market, and more than 13% are putting their properties up for sale.
Other effects are the withdrawal of rental homes from the market after the current contract expires and the transfer of residential rentals to the tourist rental market, each occurring at a rate of about 6%.
Only 1.6% of the agencies responded that they had not noticed any change in the rental market, and 0.3% indicated that they were seeing property owners put homes on the rental market due to tax incentives.
Regarding the behavior of tenants, 40.6% of the agencies indicated that the demand for regular home rentals has increased, 20.7% of agencies saw a demand for room rentals increase, and 10.1% perceive that interest in buying a home has increased.
In contrast, 19.8% of agencies did not notice any changes in demand since the new regulations were established.
José María Alfaro, president of the FAI, said in a statement that all the indicators used by real estate agencies point to a trend that will continue in the coming months with an increasing disparity between rental supply and rental demand.
“It is a true social drama that administrations do not know how to manage,” Alfaro said.
Spain has the largest housing deficit in all of Europe, whether to rent or purchase, and only about 7% of its housing stock is public, compared to 20% to 30% in other European countries. A full third of the housing lacking in Europe is needed in Spain. Not surprisingly, the situation is especially pronounced in the fastest-growing cities, such as Madrid.
Even before this latest drop in available rentals, the rental stock had plummeted 28% in the previous four years, coinciding with Sánchez’s presidency, according to data from the real estate website Idealista. The decrease has been especially steep in growing areas such as Valencia and Madrid.
