The entry into force as of Saturday of the housing price index will force large holders, and especially family offices and large funds, to leave the traditional rental market, according to Real Estate Agents. (API) of Catalonia.
A study carried out by the College and the Association of Catalan APIs estimates that the average discount that the index will force them to apply to the rents they are now receiving is 20%, with “a great dispersion”, since depending on the neighborhoods and The characteristics of the properties ranges between 4 and 42%. “It is difficult to think that legal entities, which will not have any tax compensation to face this reduction, or individuals who are going to rent their home for the first time, will opt for traditional rental instead of looking for other destinations for their homes,” warned Carles. Sala, spokesperson for the group.
The withdrawal of housing, in fact, is already occurring, Guifré Homedes, general director of Amat Immobiliaris, warned yesterday: in 2023, and in anticipation of these controls being applied, its owners removed 2% of their homes from this market. 1% were allocated for sale and the other 1% for seasonal rental. “The output is greater than these figures reflect,” he warned. We have many mandates for the sale of homes that had been rented and that their owners sell at the end of the contract. And they tell us clearly that it is because they do not want to have problems.”
However, Homedes pointed out, there are still buyers who purchase properties to invest: they accounted for 12% of new construction home sales last year and reached 17% of second-hand homes in the city of Barcelona. “They are less than in previous years and do not compensate for the rental homes that we lose through other means,” he acknowledged.
The rent cap at the reference index values ??will affect owners who have more than five homes in Catalonia, including those that are for their private use. “Someone with his own apartment and his second residence who has bought an apartment for his children is going to be treated as a large holder, with the same requirements as funds that have thousands of homes,” lamented the director of Amat.
The entry into force of the index will have a very different impact for large holders who are natural persons and those who are legal entities, recalled Carles Sala, since individuals, although they must lower their income, will have the right to benefit from reductions in the positive net rental yield in personal income tax. “If they are companies, on the other hand, they do not have tax benefits and, therefore, they are the main candidates for not maintaining their homes in the residential rental market for families,” he said. For small private owners who already have apartments for rent, in addition, there will only be containment of increases, since they will be able to put the rent of the previous contract increased with the update clause, so “it should not be the cause of the homes being of the rental market.”
The calculations of the Catalan APIs differ quite a bit from the estimates made by the Idealista portal, which estimates the price discounts that the index will represent at 36% in the province of Barcelona. In Girona it would be 35% according to their estimates; in Lleida, 29%, and in Tarragona, 33%. Idealista also warns that there will be “a massive withdrawal” of housing, which adds to what has occurred so far: 28% in the State as a whole, but 76% in the city of Barcelona compared to the maximum level of supply that reached during the pandemic, when hundreds of displaced students and workers left the city due to confinement.
In the opinion of the APIs, to make it easier for large holders, whether they are funds or family property companies, to keep their homes in the rental market, new tax credits should be introduced for homes located in areas declared tense, and rent increases should be allowed for the homes with new accessibility measures or with long-term contracts.
The APIs also questioned the Generalitat’s criticism of the index prepared by the Government. Sala explained that according to his estimates the values ??of the state index are between 10% and 15% below those set by the Generalitat index. However, he acknowledged, the decrease would be even greater if the average reference index of Catalonia was applied (the one that required the use of the November 2020 law until it was invalidated by the Constitutional Court), since in that case the decrease in The rents that large owners would have to apply would reach 25%.