Barely have Spain’s latest housing measures been unveiled and the first warnings are already emerging from the property sector. Estate agents and industry representatives say some landlords are reconsidering whether to keep their homes on the long-term rental market. There are, as yet, no reliable nationwide figures pointing to a mass withdrawal of properties – but the first signs of unease are becoming visible.
Spain Expat Press Editorial Team
Spain’s rental market is once again holding its breath.
Following the government’s latest housing measures, property professionals have begun warning of a development they have feared for some time: private landlords deciding that long-term letting is simply no longer worth the risk.
It is far too early to establish the scale of any such movement. There is currently no reliable nationwide data showing that thousands of homes have disappeared from the rental market within a matter of hours or days. Nor can the figure of 3,000 supposedly withdrawn rental properties, which has been circulating in some quarters, be independently substantiated at present.
There are, however, early warning signs.
In Ibiza, representatives of the property sector warned on 1 October that the latest measures could persuade more landlords to withdraw properties from the year-round rental market. Zenón Helguera, president of the real estate association within Pimeef, has argued that further restrictions and obligations could produce precisely that effect.
For now, these are warnings and observations from within the industry rather than official statistics recording properties that have actually been withdrawn.
Property portal Fotocasa has also expressed concern, warning after the announcement of the measures that some of the changes could ultimately produce the opposite effect to the one intended by the government.
Why might landlords withdraw their properties?
The issue is not simply about rent.
For many private landlords, the increasingly important question is how much control they retain over their property – and under what circumstances they can recover possession of a home they have rented out.
The government has introduced measures including an extraordinary extension of up to two years for certain existing rental contracts, alongside further provisions designed to give tenants greater stability.
Madrid argues that the measures are necessary to provide greater security for tenants in an increasingly difficult housing market. Renting a home, the government maintains, should not mean living with permanent uncertainty over whether a tenancy will be renewed.
Parts of the property sector, however, fear precisely the opposite outcome.
If landlords believe they have less control over when and under what circumstances they can regain possession of their property, some may simply decide not to enter the conventional long-term rental market at all.
The alternatives are obvious: selling the property, leaving it vacant for the time being, looking for other legally permitted forms of letting or simply choosing not to put it back on the rental market once an existing tenancy comes to an end.
And therein lies one of the central dilemmas facing Spanish housing policy.
Spain needs more rental homes, not fewer.
If the new measures succeed in offering greater protection to existing tenants but simultaneously discourage owners from making properties available for long-term rent, the problem could simply be transferred to those who are still looking for somewhere to live.
A shrinking supply in the face of strong demand does not necessarily mean higher rents alone. It can also mean landlords becoming increasingly selective, demanding greater financial guarantees and choosing from a much larger pool of applicants for every available property.
Young people, the self-employed and families without conventional or consistently documented incomes are likely to find themselves particularly exposed to such competition.
This did not begin this week
Concerns about properties moving away from Spain’s conventional long-term rental market predate the latest government measures.
In recent years, several Spanish cities have already seen landlords move towards other forms of letting, with seasonal and temporary contracts becoming increasingly prominent in some areas.
That is precisely why the government has also moved to tighten the rules governing temporary and room rentals. Under the new framework, landlords using temporary contracts will, among other requirements, have to demonstrate the genuine reason for the tenant’s temporary stay.
The intention is to prevent such contracts being used merely as a means of circumventing the protections attached to conventional residential tenancies.
But that creates another question: what will landlords do if they no longer wish to offer long-term tenancies and find the alternatives increasingly restricted as well?
Some may remain in the market. Others may decide that renting out their property is no longer attractive.
The next few weeks will matter
The real test will come with the rental listings themselves.
October and November should provide the first indication of whether the number of homes advertised for long-term rent begins to fall significantly following the introduction of the latest measures.
If supply drops noticeably, it will become possible to examine whether the warnings now being issued by estate agents are developing into a measurable trend.
If listings remain broadly stable, the current reaction may prove to have been largely an initial response from a nervous property sector.
For that reason, two things should not yet be confused.
There are landlords reconsidering whether to remain in the long-term rental market, and there are estate agents warning that properties could be withdrawn. There is not yet sufficient evidence to claim that Spain is experiencing a mass exodus of rental homes.
But the warning signs are worth watching.
In a housing market already suffering from a severe shortage of available rental properties, even a relatively modest reduction in supply could be felt quickly by prospective tenants.
The government wants to give greater security to those who already rent their homes.
The question now is whether it can achieve that without simultaneously persuading some of the people who own those homes that the safer option is not to rent them out at all.
That may prove to be one of the first major tests of Spain’s new housing measures.
