Property news in Spain: build-to-rent trend takes off and big opposition to new housing laws
In this week's roundup of top property news from Spain we look at why some homeowners are rushing to sell, financing for non-resident buyers and why building to rent is currently very popular.
Companies own more property than ever
Out of the more than 4 million property purchases recorded over the last 12 years in Spain, 1.7 million were bought up by firms or legal entities with more than 8 properties in their name already.
This is according to new data from Spain’s Cadastre General Directory, which highlights how investment firms - known as vulture funds (fondos buitre) in Spain - have influenced Spain’s property market over the past decade.
Legal entities (personas jurídicas - an individual, company, or organisation which has legal rights and obligations - can deduct up to 85 percent of tax from their earnings if they have 8 or more properties.
Build-to-rent in Spain on the up
This emerging submarket on the rise elsewhere in the world is becoming increasingly popular in Spain as it addresses a gap in the market.
The benefits it brings are increasing the availability of properties for rent in Spain - which make up only 25 percent of the total - and in the process offer homes which are more adapted to current demands by tenants after the pandemic.
Young property hunters, many of whom are working from home, are looking for homes with more light, space, terraces and gardens, all features that are uncommon in old Spanish homes in city centre locations.
Investors are now looking to take advantage of this rising demand and lack of supply.
According to a study by BNP Paribas Real Estate, 17,000 build-to-rent flats will be built in Spain in the next two years and by 2028 there will be 85,000 build-to-rent units in the country.
New housing laws unlikely to be applied throughout Spain
The Spanish government’s proposed changes to the country's housing laws - including price freezes, €250 rental allowances for young mid-income earners and big tax hikes on empty homes - have been slammed by Popular Party, the main opposition party.
Even if the measures were approved by the Spanish cabinet, regional governments and town halls have the final say on whether they come into force.
PP leader Pablo Casado, who referred to PSOE and Unidas Podemos’s draft housing law as “suicidal interventionism”, has since said that in autonomous communities and cities where his party is in power, the proposals will never come to fruition.
This includes the governments of Andalusia, Galicia, Madrid, Murcia and Castilla y León, which have a total population of around 21 million people.
“We’re not going to raise property tax on empty homes,” Madrid’s right-wing mayor José Luis Martínez Almedia has already declared.
EXPLAINED: Spain’s proposed new housing laws
Some property owners are rushing to sell
Even though it’s yet to be approved and was only announced last week, Pedro Sánchez’s proposed changes to Spain’s housing and renting laws have already caused a rise in the number of property owners choosing to put their homes on the market rather than continue letting them out or leaving them empty.
According to Antonio Carroza of Alquiler Seguro (Safe Renting), a company specialising in protecting landlord from delays in payment, there’s already been a rise of 15 percent in the number of clients who want to sell their properties as soon as possible to sidestep the higher taxes on empty homes, or rent them out before rent caps are introduced.
“Most of these properties are in the hands of individual owners; and when a problem like this arises, they take their houses off the rental market," Carroza told El Confidencial Digital.
According to Carroza, for large investment funds who previously treated the two Iberian markets almost as a single entity, Portugal now offers more alluring tax conditions and benefits than Spain.
Which Spanish regions require a building permit to install solar panels at home?
On Sunday October 10th, Madrid became the latest region to scrap this bureaucratic step from its requirements for installing solar panels.
That means that as things stand, the regions which don't require this complex and time-consuming documentation are Madrid, Andalucía, Aragón, Catalonia, Castilla y León, Castilla-La Mancha, Valencian Community, Extremadura, Galicia, Balearic Islands, Canary Islands, Navarre.
The Spanish regions that still require planning permission are Asturias, Cantabria, Basque Country, La Rioja, Murcia.
However, even if you're region doesn't require a permit, there's other paperwork which you may be asked for from local authoties when installing solar panels, which you can check out here.
Did you know? Non-resident buyers get less financing
If you spend less than 183 days in Spain you are less likely to get financing for a Spanish mortgage and will have to put a bigger amount down initially.
Whereas residents will usually be lent around 70 to 80 percent of the total property amount to be paid and get better interest rates, non-residents can only expect a Spanish bank to cover 60 percent of the cost.
This is due to the fact that if Spanish Banks pursue assets in the event of a default, the only thing they could have access to would be the property in Spain.
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Companies own more property than ever
Out of the more than 4 million property purchases recorded over the last 12 years in Spain, 1.7 million were bought up by firms or legal entities with more than 8 properties in their name already.
This is according to new data from Spain’s Cadastre General Directory, which highlights how investment firms - known as vulture funds (fondos buitre) in Spain - have influenced Spain’s property market over the past decade.
Legal entities (personas jurídicas - an individual, company, or organisation which has legal rights and obligations - can deduct up to 85 percent of tax from their earnings if they have 8 or more properties.
Build-to-rent in Spain on the up
This emerging submarket on the rise elsewhere in the world is becoming increasingly popular in Spain as it addresses a gap in the market.
The benefits it brings are increasing the availability of properties for rent in Spain - which make up only 25 percent of the total - and in the process offer homes which are more adapted to current demands by tenants after the pandemic.
Young property hunters, many of whom are working from home, are looking for homes with more light, space, terraces and gardens, all features that are uncommon in old Spanish homes in city centre locations.
Investors are now looking to take advantage of this rising demand and lack of supply.
According to a study by BNP Paribas Real Estate, 17,000 build-to-rent flats will be built in Spain in the next two years and by 2028 there will be 85,000 build-to-rent units in the country.
New housing laws unlikely to be applied throughout Spain
The Spanish government’s proposed changes to the country's housing laws - including price freezes, €250 rental allowances for young mid-income earners and big tax hikes on empty homes - have been slammed by Popular Party, the main opposition party.
Even if the measures were approved by the Spanish cabinet, regional governments and town halls have the final say on whether they come into force.
PP leader Pablo Casado, who referred to PSOE and Unidas Podemos’s draft housing law as “suicidal interventionism”, has since said that in autonomous communities and cities where his party is in power, the proposals will never come to fruition.
This includes the governments of Andalusia, Galicia, Madrid, Murcia and Castilla y León, which have a total population of around 21 million people.
“We’re not going to raise property tax on empty homes,” Madrid’s right-wing mayor José Luis Martínez Almedia has already declared.
EXPLAINED: Spain’s proposed new housing laws
Some property owners are rushing to sell
Even though it’s yet to be approved and was only announced last week, Pedro Sánchez’s proposed changes to Spain’s housing and renting laws have already caused a rise in the number of property owners choosing to put their homes on the market rather than continue letting them out or leaving them empty.
According to Antonio Carroza of Alquiler Seguro (Safe Renting), a company specialising in protecting landlord from delays in payment, there’s already been a rise of 15 percent in the number of clients who want to sell their properties as soon as possible to sidestep the higher taxes on empty homes, or rent them out before rent caps are introduced.
“Most of these properties are in the hands of individual owners; and when a problem like this arises, they take their houses off the rental market," Carroza told El Confidencial Digital.
According to Carroza, for large investment funds who previously treated the two Iberian markets almost as a single entity, Portugal now offers more alluring tax conditions and benefits than Spain.
Which Spanish regions require a building permit to install solar panels at home?
On Sunday October 10th, Madrid became the latest region to scrap this bureaucratic step from its requirements for installing solar panels.
That means that as things stand, the regions which don't require this complex and time-consuming documentation are Madrid, Andalucía, Aragón, Catalonia, Castilla y León, Castilla-La Mancha, Valencian Community, Extremadura, Galicia, Balearic Islands, Canary Islands, Navarre.
The Spanish regions that still require planning permission are Asturias, Cantabria, Basque Country, La Rioja, Murcia.
However, even if you're region doesn't require a permit, there's other paperwork which you may be asked for from local authoties when installing solar panels, which you can check out here.
Did you know? Non-resident buyers get less financing
If you spend less than 183 days in Spain you are less likely to get financing for a Spanish mortgage and will have to put a bigger amount down initially.
Whereas residents will usually be lent around 70 to 80 percent of the total property amount to be paid and get better interest rates, non-residents can only expect a Spanish bank to cover 60 percent of the cost.
This is due to the fact that if Spanish Banks pursue assets in the event of a default, the only thing they could have access to would be the property in Spain.
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