In recent months, with the escalation of house prices in Spain and the new proposals of the central executive to regularize the market, a lot is being pointed out to owners and their alleged interests of "dynamiting" the market, an affirmation that could not be further from the truth. As a Real Estate PersonalShopper with more than 15 years of experience in the Barcelona market, I have had the opportunity to advise a large number of investors who are looking for a return through the purchase of homes to rent them out. This, like any other, is a valid form of investment that deserves to be defended, since the challenges and problems of the real estate sector are elsewhere . We need to change focus.
Investing in a flat to rent it out is not an easy or risk-free path. In many cases, investors make a large initial investment, often applying for a mortgage from the bank, with the aim of obtaining a long-term return. The profile of most of the investors I advise is far from that of the great speculator who accumulates dozens of properties. We are talking, in 9095 percent of the cases, of people who acquire one or two flats, with the intention of supplementing their pension on the day they retire. These people see renting as a way to ensure a monthly income flow, which allows them to maintain a decent standard of living in their retirement stage. Isn't this as valid a reason as investing in mutual funds, stocks, or any other type of asset? However, the government is doing nothing more than feeding a climate of interventionism that endangers not only the market, but also a right as basic as private property. Restricting the price at which a landlord can rent out their home not only discourages investment, but can also have detrimental effects on the market in the long term, such as the disappearance of properties from the rental market, which is already starting to happen in cities such as Barcelona. where the problem of supply shortages is getting worse every day.
It is true that we have a serious problem of high rental prices, which has led to a situation in which many young people cannot access a home alone and are forced to share flats or even rent rooms. But, despite the fact that this reality is undeniable, I do not believe that intervention in prices is the solution. In my opinion, it is like putting a patch on a wound, completely ignoring the root problem, which is none other than the lack of supply.
If we analyse this problem, we find three key ways in which the Government can and should act to address this problem effectively, the first of which is the promotion of housing construction . Through all kinds of active policies, which can range from the construction of public housing, financed with the taxes that we all pay, or through agreements with private developers to increase the housing stock .
To speed up these construction processes, it is vital to reduce bureaucracy in the transformation of soils. Nowadays, one of the great obstacles that prevent the supply of housing from increasing significantly is all this "paperwork" that surrounds the transformation of land. The lengthy processes of regrading land and obtaining the necessary permits greatly delay the entry of new homes into the market. If we want to solve this problem, it is essential that the Government drastically reduces these procedures.
And, ultimately, and as we have been mentioning, reducing interventionism in prices, which until now, in every territory that has been applied, as is the case of Barcelona, the effect achieved has been the opposite of the desired one, which is none other than to discourage owners from renting out their flats. At the same time, private developers are also paralyzing their "built to rent" development projects, which further reduces the supply. If we really want more flats to be available for rent, the market must be liberalised and the State must guarantee legal certainty to landlords, so that they feel safe and supported to enter the market.
These three measures, if implemented in a coordinated and effective manner, would generate a significant increase in the supply of housing, and the more housing available, the more housing prices would naturally fall, allowing more affordable access to housing, without the need for government interventions.
Of course, these solutions are not immediate nor will they result in a change from one day to the next. The problem of access to housing is structural, and we cannot allow the government to continue implementing short-term measures that do not work and that are designed exclusively to satisfy its voters. Access to housing is too important an issue to be treated in this way.
In short, investing in rental housing remains a valid and profitable option, as long as the rules of the market are respected and regulations are not imposed that limit profitability and discourage investment. The solution is to increase supply, not to limit prices. And to achieve this, we need a government that is committed to structural and forward-looking measures, not temporary patches that solve nothing.