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Homes for rent: the terror of big landlords

Apr 20, 2021 | Last news, Last news

The lack of rental housing has become a major problem in Spain when, from the mortgage crisis, a demand has emerged as we had rarely known before. We need more rental offers to get closer to European standards – homes for rent in Spain were, in 2017, 22% of the total, compared to an average of 33% of Western European countries – and in order to be able to meet new housing needs and prevent the strong pressure of demand in the face of low supply, which translates into price inflation.

According with , between 2015 and 2019 666,321 new homes were registered in the Spanish cadastre, of which 37% belong to a “large owner ”,“ considering that this is a person or company with more than five properties for residential use ”, which represents a significant increase in this type of owners compared to 26% in the 2008-2014 stage.

This evolution seems to cause alarm over the risk that our real estate market will be voraciously dominated by “big landlords” who would be able to act more and more * monopolistically, controlling it and determining its rules of game. But in reality, we would be faced with excellent news because landlords who register more than five homes will no doubt use them for rent. That is, the increase in the percentage of these so-called “large landlords” would mean that new rental housing is growing, at least in proportion. And this is precisely the first major social goal to be achieved in Spain.

We need more homes for rent to get closer to European standards

But if this is the case, what is the point of this suspicion of the “big owner”? It’s just that we think that we will be able to cover the huge gap we have in terms of rental offer with developers of less than five homes, which refers to , or less than ten or fifteen homes, what are the limits set today by existing legislation for “big tenants”? Of course, this type of promoter will not exist due to the absolute unfeasibility of projects of this very small scale.

In fact, the focus of the social gaze on and against “big landlords” is due to four phenomena entering the 21st century:

1. The provision by the financial sector, from 2008, of a huge fleet of empty new homes that fail to fulfill their social function of providing housing to the population.

2. The option of resolving the solvency crisis of many mortgaged families, with foreclosures and evictions, instead of having activated debt relief and kept these families in their homes.

3. The entry of investors – since the bubble years – into the most devalued market by buying apartment buildings and harassing vulnerable residents to evict them.

4. The sale of public park housing to investors in violation of the rights of residents. Four phenomena that have been and are flagrant attacks on the right to housing. Practiced mostly by large operators (financial or investment funds) with total opacity.

The unbearable suffering of the more than 600,000 families who have lost their homes due to payment difficulties explains the widespread social animosity towards this type of large operators. The laudable social programs that some of them have devised and developed are useless, keeping vulnerable families in their park, giving them social support and encouraging their reintegration into employment. The global evil has been excessive and these initiatives alone are not enough to reverse the bad reputation of this sector.

And, what is worse, these bad practices and this great evil caused have given rise to the trivialization of the concept of “big landlords”, attributing to all rental providers over 10 or 15 homes equal guilt that those who committed and still commit the atrocities.

In Spain, atomization and small ownership are the hallmarks of the rental market

In Spain, atomisation and the small owner are the hallmarks of the rental market: in the city of Barcelona, ​​owners with less than 10 homes contribute almost 70% of the total, and the remaining 30%, the large holder is the City Council, with 7,000 homes and the rest are 2,300 private companies, with an average of 29 homes each and the largest with 1,300. That is why it is a mistake to look for keys to understanding our important market concepts that may fit well in other latitudes but not in ours: in the city of Berlin, the City Council has 260,000 homes and the largest private owner, others 110,000. Two zeros on the right perhaps if they justify the concept of “big landlords”.

In order not to fall into arbitrariness, we are already establishing strict barriers to practices that infringe on the right to housing and its social function, regardless of the size of those who carry them out. And we establish agreements with all operators to offer affordable and social rental, stable over time, whether large, medium or small. And we do not engage in sterile and counterproductive debates about the “ethical” and blurred dimension of operators. At most when the establishment of categories based on size has two perverse effects: diversion of rental housing for sale and artificial splitting of business organizations from larger to smaller size to circumvent the law; that is, an even greater reduction and darkening of the market.

And, looking to the future, we think we need “large and medium-sized operators”, the only ones capable of producing the necessary volumes of rental housing. Starting, of course, for public operators who, despite the meager stock of public rental housing in Spain – around 1.5% of the total, compared to a European average of 15% – are the largest “large owners” of the country; following up with non-profit operators making their way into a world that is unfavorable to them; and ending with private operators who are willing to play the same game as the rest as long as rules of the game are established that guarantee the necessary balance between social function and profitability.

In these three types of developers there is coincidence in the need for rental housing to be affordable -according to the great social objective of Spain-, working for this on public or protected land or with the help of the administration in the developer or tenant, ie housing whose price will not be marked by the market but officially by housing plans, therefore, without risk of inflation.

We are beginning to get used, therefore, to considering the big ones – in our case, at most medium – operators as future allies of the public sector and, as Sancho warned, not as “giants” against the which must be fought, if not like those “windmills” with which to establish pacts and “that their arms are the blades, which, turned by the wind, walk the stone of the mill.” The important thing is the flour that comes out of these mills, that is, not who they are, but the homes they are willing to offer.

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