Growth in Housing Market Faces Challenges in April, According to Fotocasa

A year after the introduction of the Housing Act, both homeowners and renters have expressed negative views about its impact, claiming it complicates the rental process. This sentiment is highlighted in a study conducted by Fotocasa Research, which involved over 8,000 interviews with individuals active in the real estate sector in the past year.

The research reveals a significant decrease in rental housing supply due to the law. Many landlords are reconsidering their rental strategies: 20% of those familiar with the law are contemplating renting out rooms individually, 24% are opting for holiday rentals, and 31% are leaning towards temporary rentals.

“The primary issue in Spain’s rental market is the lack of supply. If the inventory continues to decline due to adverse regulations, the market will become even more constrained, leading to higher prices and reduced accessibility. The data indicates that the Housing Law is not well-received within the sector, as it shifts responsibility from the government to private landlords,” explained María Matos, research director and spokesperson for Fotocasa.

The law’s negative impact is expected to have long-term repercussions on rental housing quality. Nearly half (44%) of the landlords familiar with the law stated they are very likely or certain to reduce investments in home improvements.

“Regulations that reduce profitability for owners discourage them from renovating and improving their properties, resulting in lower quality and comfort. The outdated condition of many homes is a significant challenge for renters. In Spain, 42% of houses were built between 1950 and 1980, and 30% before 2000. Such measures ultimately harm tenants, who are the most vulnerable,” added Matos.

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Overall, perceptions of the law are becoming increasingly negative. Those familiar with the law predominantly hold pessimistic views about its market impact.

On the rental side, only 22% believe it is now easier to rent a home, a drop of three percentage points from six months ago. The prevailing opinion (35%) is that the law makes it harder for people to find rental housing. From the landlords’ perspective, a significant majority (39%) have negative views, compared to just 15% who hold positive ones.

Renters’ pessimism has grown in the past six months. The proportion of tenants who think the regulations complicate their rental plans has risen from 35% to 36%. Those who believe the law will improve their situation have decreased from 30% six months ago to 24% in February 2024.

Among landlords, the majority (52%) feel the law makes renting out properties more difficult. Meanwhile, 32% think the law will not affect their situation, and only 18% believe it makes renting easier than before.

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