Will rental prices rise due to the Housing Act and contract revisions in line with the CPI?
According to the Rent Negotiating Agency's forecast, prices could rise by up to 5% thanks to the Housing Law and contract reviews in line with the CPI.
Since the outbreak of the pandemic, the supply of rental housing has grown considerably. On the one hand, a large number of homes that had been rented for tourist rental were put up for conventional rental, and on the other hand, as landlords were affected by the lack of income due to the pandemic, they rented out their empty homes to obtain more liquidity.
This increase in supply put downward pressure on rental prices, reaching double-digit decreases in some autonomous communities.
Knowing the reasons why prices have fallen, those in power, whether for political or ideological reasons, have approved a draft bill that will have a direct impact on the supply of rental housing, since many of the measures go against the generators of supply, i.e., the landlords.
In principle, logic suggests that the lower the supply, the higher the prices should tend to rise.
The points of this draft bill that have earned the most criticism are above all those that penalize empty homes and those that have to do with the regulation of the market.
These measures, far from making renting more accessible and economical, will probably cause price increases due to the impact they have on small owners (who will see their tax reduction for renting a property reduced by 10 points, will suffer the IBI surcharge for having empty apartments, which even affects non-stressed areas, the duration of rents will be extended to 11 years if the tenant so requests and rents will have to be frozen).
It also establishes a surcharge on IBI (150%) that will fall on owners who have up to 4 houses (two of them empty).
A whole explosive cocktail that discourages and harms the free rental market in which we will see rents frozen for very long periods of time (the rents of the new rents will not be higher than the rents of the last contract updated with the CPI).
In this context, it is more than likely that uncertainty will be generated in many homeowners who may prefer to take their homes out of the rental market and put them up for sale.
If we add to this factor the growing inflation and price increases, the scenario that is presented is, in principle, bullish.
In any case, 2022 is a complicated year in terms of forecasts. The post-pandemic situation does not yet show a clear horizon.
The geographic location of housing (and its typology) has and will have a lot to do with the evolution of prices in each area (both for rent and for sale).
In areas such as Madrid capital and North, with its most representative areas; La Moraleja, El Encinar and Ciudalcampo and in cities such as Barcelona, San Sebastian, Palma and Bilbao, a scenario of increase is clearly drawn, which has already begun with the revision of contracts according to the CPI.
As the year progresses, we could see changes in the trend due to the evolution of COVID-19 and its impact on the way of life (and living solutions).
What seems clear is that 2022 looks set to be a bullish year for both home sales and rentals.