The real estate sector contemplates with consternation the measures that the new Housing Law will supposedly include after the leaks of the pact between PSOE and United We Can , and that will be a serious blow to this market.
According to the experts consulted by elEconomista, this regulation can cause a real shock in the residential production sector , paralyzing many new construction projects, which will lead to a notable increase in the cost of the existing supply.
In the absence of knowing the details, one of the most “damaging measures for the sector” in general and for the balance of the promoters in particular is the one that proposes to allocate 30% of new projects to social housing. “With the price that has been paid for the land, the most normal thing is that most future developments incur losses if that percentage has to be allocated to protected housing. The accounts do not go out,” they point out from a large developer.
This measure would completely disqualify the business plans of all promoters, which could even lead the listed companies to carry out a profit warning, the listing of these firms on the stock market being even more punished.
What is clear from the sector is that investment towards residential is now at stake. This is what they assure in a statement from Asprima to its associates, in which the employer indicates that this measure “will produce a reduction in investment and will cause a clear effect of expulsion of both national and foreign investment , moving these between autonomous communities depending on whether or not they apply this rule. “
Thus, they recall that urban planning and housing transfers fall on the CCAA and warn that the investment could even leave “the country depending on how damaged the legal security is in the final text of the Law.”
In addition, the employer’s association looks to Catalonia as a mirror of what could happen in the rest of the country, since in this region there is already a limitation on rental prices and it is obliged to allocate a part of the buildable area to social housing. In this case, they highlight that, according to a survey by the Association of promoters and builders of Catalonia among its associates regarding both initiatives, 55.3% have stopped investment waiting for a new scenario, 31.6% have reduced their investment and 13.1% have transferred their investment to another territory.
In Catalonia, 53% of developers have stopped investment waiting for a new scenario
One of the regions where prices have risen the most in recent years is Madrid. However, from the regional government they are totally against a market intervention. This is what Paloma Martín , Minister of Environment, Housing and Agriculture of the Community of Madrid assures elEconomista , who assures that what has been known of the Housing Law is “extremely serious” since “Sánchez endorses the proposals most radical of his government partners ” and defends that ” ideological sectarianism cannot put a family’s lifetime savings at risk invested in a flat since 90% of the houses that are on the market are owned by small owners.
“Martín assures that they will be attentive to the text, but” if its application depended on the CCAA, we would look for how to shield ourselves against interventionist policies to protect to the owners “.
Furthermore, Martín warns that with the limitations set forth in this law, “the developers will leave the country and the investments will leave .” in the market, expand the supply of public housing and help young people “, explains the Minister of Housing.
From Asipa, the Association of Realtors with Heritage for Rent, they see “very disappointing that all this has ended in a package of populist and unconstitutional measures” that “has been proven to be counterproductive in other countries” and they believe that “the only thing that will cause is that the savings that have to finance the rent disappear “.
Attack on large landlords
The employers believe that using the concept of large landlord “is not only discriminatory and unfair towards companies that channel the collective savings of small savers who cannot access the real estate market directly, but also diverts the responsibility of the administrations in their inaction to plan and attend to the housing needs of the neediest families “.
For his part, Mikel Echavarren, CEO of Colliers, points out that “the taxation of large homeowners is already very negative, since they cannot recover VAT on their investments, from their service providers, maintenance and renovations”, for which he thinks that “to speak of withdrawing his” tax privileges “is an unfortunate concept”.
In addition, the manager agrees with the rest of the experts that these measures will lead to a flight of investment. “The risk of rent reductions in areas declared stressed by municipalities opens a kingdom of Taifa in the Spanish real estate market and will cancel the investment in locations considered” high risk “for investors,” explains Echavarren, who highlights that “the net profitability of investments in rental housing is situated, with proper management, around 3-4% of the investment. Increasing tax costs and lowering rents will directly cause new investments to stop “.
José Ramón Zurdo , general director of the Rental Negotiating Agency also warns of the negative impact that these measures can have on the residential sector. “As we have already said repeatedly, it seems to us a serious mistake to attack the large owners who are the ones who generate and can generate, immediately, more supply of rental housing. As we have already stressed, it is a measure that goes against free competition and market freedom.
Increasing taxation and lowering prices will go directly against the viability of their business, and they will end up closing their activity in Spain. In this way, the supply of rental housing will decrease, since that many of these assets, which were already destined for rent, will be sold and the offer will be lost “.
Carmen Panadero, president of WIRES, highlights that “considering those who have 10 or more homes to be a great holder or forcing developers to reserve 30% of the projects for protected housing are initiatives that, far from betting on the creation of a park public rental led by the Administration and in private collaboration, transfer all responsibility to the private sector “
“Sadly, as has already happened in other communities or cities, the objective that is intended will not be achieved, but we will see the new licenses for new construction fall if this new norm comes into force,” warns Panadero.
“We will not only see how the supply will be reduced ?? as has already been seen in other countries ?? but we will see how the long-awaited rehabilitation plan, and therefore the regeneration of our cities, remains fallow”, continues the expert, that also believes that “this legislation, in turn, will be detrimental to the inclusion of the green factor in newly built real estate parks , because it will make the finalist product more expensive due to the distribution of loads, and there will be less scope to implement the sustainable and efficiency measures that our cities are urgently needing.