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‘Live in the woods?’: Concern over rising rents in Spain
MADRID, Sept 26, 2018 (BSS/AFP) – Capsule flats, price rises forcing
tenants out: rents in Spain are soaring post-crisis, fuelling concerns of a
new “bubble” in a country still traumatised by the collapse of its housing
sector.
Ruth Melida is in a jam. In April, she found out that the monthly rent of
her flat where she lives with her unemployed husband and two children would
rise from 605 to 999 euros ($710 to $1,170).
That leaves the family with under 200 euros to spare for other expenses.
And the situation could get worse if her husband’s unemployment benefits run
out next month.
“What do we do, those of us who don’t have the means? Do we go live in the
woods?” asks the 41-year-old, who lives in San Sebastian de los Reyes outside
Madrid.
Like her, more and more Spaniards are having trouble paying their rising
rents, with many forced to move, particularly in Madrid and Barcelona, as
they struggle on low salaries or benefits.
“People who have lived all their lives in a neighbourhood have to leave
for increasingly peripheral districts that are adapted to their budget,”
warns Marta Montero, spokeswoman of an association for the right to housing
in Madrid.
In the second quarter, rents rose 15.6 percent year-on-year in Spain,
according to real-estate website Idealista.
Since 2010, they have increased by 35 percent in Barcelona and 30 percent
in Madrid.
“Every time I’ve left an apartment, its price has then risen 50 to 100
euros on Idealista,” says Angel Serrano, a consultant in Madrid.
– ‘Capsule’ rooms –
Spain’s Prime Minister Pedro Sanchez has promised a housing law whose
exact details remain unclear but would likely include a rise in the minimum
length of a rental contract from three to five years.
The leap in rents comes as Spain is still reeling from a devastating
economic crisis that kicked off in 2008 when a housing bubble burst, leading
to the eviction of thousands of indebted families who had bought their homes
on credit.
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As a result, “most people resorted to renting by necessity,” says Beatriz
Toribio, head of research for real-estate web portal Fotocasa.
One company caused a scandal this month in Barcelona, offering tiny,
three-square-metre (32 square-feet) “capsule” rooms built one on top of the
other in a house with shared living spaces for 200 euros a month.
According to the EU Eurostat statistics agency, 43 percent of Spaniards
who rent private housing spent more than 40 percent of their earnings on rent
in 2016, compared to an average of 28 percent in the European Union.
– Waiting for eviction –
“We’re living in a rent bubble,” says Montero, who blames investment funds
that have snapped up billions of euros in real-estate assets from banks,
which themselves seized them from indebted families.
That’s what happened to Melida’s flat complex, which was social housing
when she moved there in 2014 but was then snapped up by an investment fund
that raised rents, forcing dozens of residents to leave.
They can’t pay the new rent and are waiting to be evicted.
But for Fernando Encinar, co-founder and head of research at Idealista,
talking about a “bubble” is wrong as he says the current rise in rents is not
due to speculation but the consequence of an economic recovery that began in
2014.
Spain forecasts economic growth of 2.7 percent this after three years of
growth of 3.0 percent or over.
Encinar says lower rental prices “weren’t real” several years ago and
corresponded to “a crisis situation”.
From 2010, thousands of homeowners chose to rent out their places rather
than sell them as there were no buyers in a country where the norm had been
to own your flat or house, and they had to charge low prices.
Still, faced with the current rise, Madrid’s left wing city hall is
battling Airbnb-type seasonal rentals they accuse of driving up prices.
The city hall in Barcelona is trying to encourage owners of empty housing
to rent their properties out.
Far-left party Podemos, meanwhile, has submitted a bill in parliament
regulating rents and banning the eviction of tenants who cannot be re-housed.
But others say that’s not the solution.
Toribio says more social housing should be built in a country where it
only represents 2.5 percent of all housing, according to the Housing Europe
foundation.
The government wants to build 20,000 units of social housing in four to
six years.
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