Barcelona’s housing-conscious mayor Ada Colau together with her city council are aiming to increase the number of homes available for public housing on a rental basis. The aim is to make more accommodation available in Barcelona for those who can’t afford to buy but still need a place to live. The municipality’s aim is to provide approximately a thousand apartments for public rental housing. Simultaneously the city council want to promote the economic activity of this social sector to provide employment in the construction industry and other sectors. The new program which spans 2014-2016 has a very clear strategy plan. The strategy should provide 10% more public rental housing by the end of 2016.
The Public Rental Housing Strategy
Construction of 500 social rental homes by Patronat Municipal de l’Habitatge de Barcelona.
The municipality will buy and renovate 300 existing homes in Ciutat Vella, Sants and Nou Barris. These dwellings will be made available for public housing rental.
A program to make 200 privately owned homes available for public housing rentals.
Encouragement of grants to social rental promoters and to encourage the completion of half-built properties.
Promote rehabilitation grants in the Canyelles District.
Who Will Get the Public Housing?
The rental homes will be made available to select groups. 50% of the 1,000 homes will be earmarked for young people, families and couples who will pay approximately 200€-400€ rent each month. The rent is determined by the income level so that your rent is never more than 30% of your salary. The rest of the homes will be reserved for social emergencies to provide accommodation to people who have been evicted from their homes for failing to keep up their mortgage payments and for the elderly, disabled and victims of domestic violence. It is clear that there will be more applicants than available homes and so the properties will be allocated by drawing lots. More public housing is continuously being added to the properties available; to date there are approximately 10,423 apartments used for social rental programs in Barcelona.
Despite the overwhelming optimism about the property market in Spain and the stabilization of house prices in relation to rental incomes rent continue to fall. Thise points towards a greater supply than demand. One of the sectors being blamed are illegal rental properties for creating an unbalanced supply and demand. We can also point our finger at homeowners who have not managed to sell their property and so have started renting instead.
In September 2015 the average cost of renting a home in Spain was 0.4% lower than 12 months ago in September 2014. This figure may not break the bank but it is an indicator of a trend we should be aware of. In fact that trend has continued for the last 30 months and looks like it will either continue to fall gradually or stabilize but a sudden up swing seems unlikely. Rental prices have fallen in all regions except Catalonia and the Balearics where rental prices are up by 0.2%. Valencia seems to be the hardest hit with rentals 0.8% lower than they were in September 2014.
The issue of illegal rentals and the rampant short term rentals in Barcelona has been recognized by the new mayor who aims to put a stop to it. She has already issued several statements about policy which could potentially insure that illegal rentals are stopped and that landlords obey the laws relating to taxes, standard control, rental rates and property advertizing. This may be bad news for homeowners who are renting out their properties but for holiday makers this is a good thing. According to the calculations of house values as a reflection of rental potential, a house can be valued as a multiple of its potential rental income. For this reason investors consider it bad news for the market if rental prices continue to fall as owners and vendors will see house prices falling.
However for home owners or potential buyers in Barcelona this does not seem to be a problem. The forever-popular holiday resort city appears to have plenty of room for rentals to thrive and home owners and sellers to obtain their asking prices.
10 Facts about Buying as a Rental Investment in Barcelona
If you are planning on buying a property in Barcelona with the intention of renting it out to make some money then there are a few things you should take into account. Short term rental in Barcelona may be harder to manage than a long term rental, however if this is your goal then consider the following:
1. Regulations in Barcelona make it difficult to rent out for short period to tourists. Before you make your purchase get a lawyer to check out your specific property and district to make sure you will be able to carry out your plan.
2. Regulations are different for different Barcelona Districts.
3. Property can only be rented out to tourist for short terms if you have a license from the town hall. In the Gothic Quarter (Barrio) and Cutat Vella districts the town hall is no longer issuing these licenses due to the high demand. However you can purchase a property in these areas which already has a rental license or buy a license from someone who already has one.
4. To operate a rental property in all areas of Barcelona you need a permit from the Regional Government. Although many people operate rental properties without the required paper work it is not worth your while. If neighbors complain or if someone staying in the apartment injured themselves you will be liable.
5. Consider your neighbors. If you have decided to rent out a property in a quiet neighborhood then bear in mind that they could complain about noise and the constant coming and going of tourists.
6. Don’t compete with nearby hotels. Chose a property that is not too close to a Barcelona hotel as the price of a hotel bed in Barcelona has dropped in recent years and could compete with your property.
7. It is mandatory to sign a short-term rental contract no matter how short the rental period. If you or the agent running your property do not insist on this then you open yourself up to many problems including the tourist refusing to evacuate the apartment.
8. If you are managing your own rental property in Barcelona then you are responsible for all the legal papers and government permits.
9. All rental properties have to be inspected by a local government authority who will then issue a permit for short term rentals. It is illegal to operate a rental property in Barcelona without this permit.
10. An ideal rental property is on a quiet street but close to public transport and attractions. Choose a safe area of the city where there are low petty crime rates, for example Eixample. A property with parking is a big plus.
Although investing in a property for short term rental in Barcelona can bring in large returns on your investment there are many angles to consider and the work does not end the minute you have bought the property.
