Investing in Properties in Spain? New Record of Investment to Rent

Have you heard that when investing you should do the same as the big fishes? If you agree with that, you may consider buying property to rent in Spain. According to research done by CBRE in 2018, the investment to rent reached a new record of 4,270 million euros in Spain. Perhaps more significant is the fact that the 80% of this investment was done by corporations. But don’t misunderstand: This investment is not for offices or workplaces, but for residential use.

Among Spaniards, the philosophy of buying a house has strong foundations. However, the reality is changing, and while the prices of the properties are growing, salaries are not, and not many people are able to buy a flat, even using a mortgage.

As a result, the renting activity has increased and big companies are betting that it will continue doing it in the coming years.

How is the Market for Investing to Rent?

Spain is living through turbulent times in political matters. Actually, the whole world is. Just so you have a little perspective, Spaniards repeated the elections several times because the parties were not able to reach an agreement to form a coalition. Eventually it was possible, and the PP managed to govern for a few months, but then in June 2018, the PSOE took the government through a vote of no confidence.

Furthermore, these two parties are more dependent on other third parties than ever to keep the government. As a result, the market of renting is enduring some fluctuations. It seems that investors believe in the potential that renting residential properties has, but they are afraid of the changes in regulation.

One of the main risks of renting a residential property in Spain is that a tenant unable to pay could be allowed to remain living there. This is very negative for the owner, because not only does not receive any income from the property, but it also is deteriorated by the use.

On the other hand, the Spanish population became very aware about the drama of people losing their houses in the last crisis. Nowadays, it is relatively common to see how some people are removed from their homes due to money matters.

As a result, some political parties have been trying to make renting rules more favourable for tenants, and this brings insecurity for owners. Some examples of the changes that the owners are afraid of is limitation of the guarantees that the owner could ask for, limitation of the prices, and the suspension of the eviction when the tenant is in a vulnerable situation (at least for a month until social services finds a solution).

Worst of all is not the regulation itself, but the uncertainty about how it will be. We only can wait to see if PSOE and Podemos (the two main parties in the coalition governing Spain right now) continue their negotiations about these regulations