Spain Acquires Venture Capital Owners As Housing Cost Rises

Spain’s leftwing authorities is championing enlist controls as property costs ascend all through Europe, a big part of a proposed housing legislation that it says will protect frail inhabitants contrary to funding funds and distinctive enormous landowners. Critics say the measure is misguided and can put the country’s give of lodging in danger. Anyway Ione Belarra, head of the unconventional Podemos get together that helps the receipt, referenced it will proper the stability in a sector revamped by the eurozone financial disaster longer than 10 years before and the appearance of institutional funds. Funding group Blackstone is currently Spain’s biggest landlord

“Now we are beginning to put limits to this and say to the big landlords that they can keep doing housing business, but not at any price,” she added. “Not at the price that there are evictions, or that people have to pay more than 30 per cent of their income in rent.”

“The big investment funds saw a niche here to speculate in the housing business,” Belarra, who is also Spain’s social affairs minister, told the Financial Times in an interview.

Blackstone, which now owns close to 30,000 homes in Spain, declined to comment.

The bill casts light on negotiations over the economy within the ruling coalition, with Podemos pushing for a more radical line than the bigger Socialists of prime minister Pedro Sánchez.

The proposals come at a time of concern across much of Europe at rising rents and property prices. In Germany, Berlin’s citizens voted in September to expropriate big landlords to reduce rents.

Podemos insisted on the text of the housing bill as a condition of its support for the 2022 budget, the Socialists’ legislative priority.

Among many other moves the bill seeks to ban the sale of social housing to investment funds. In 2013, when local authorities were desperate to balance their books in the wake of the financial crisis, Blackstone bought 1,860 flats from the city of Madrid for €129m. They are now part of the group’s €5bn portfolio of Spanish property, which includes hotels and offices.

Blackstone’s accumulation of those assets has coincided with deep structural changes in the Spanish property market. Before the crisis the economy revolved around the construction sector, which drove the banking system, the job market and even government revenues. After the crash, mortgages became far harder to obtain and hundreds of thousands lost their homes.

As a result, more people sought to rent, reversing a trend in which housing ownership had risen for decades — although owner-occupiers still account for more than three-quarters of homes. Increased demand has pushed up costs. According to calculations by EY, the consultancy, average rent has risen more than 40 per cent over the past five years, despite a dip during the pandemic.

The issue is all the more powerful among Podemos supporters because of Spain’s youth unemployment rate of more than 30 per cent — more than half of 25 to 29 year olds still live with their parents. Against such a backdrop, the housing bill, whose backers hope will become law in the first half of next year, is politically charged.

One measure would allow regional governments to force big landlords — defined as those holding more than 10 properties — to cap rents in so-called “stressed areas”, where rent has risen significantly above inflation. The legislation would also allow regions to implement tax incentives for smaller owners to reduce rents or impose penalties to prevent them from keeping properties vacant. Javier García-Mateo, partner for real estate at EY in Spain, said rental properties’ share of the country’s total housing inventory had risen from less than 10 per cent in 2010 to 15-20 per cent today, but argued the proposed law threatens future supply.

“In any market in which you intervene with a cap, you will disincentivise developers,” he said. According to his estimates, of a pipeline of 28,000-29,000 flats that developers were preparing to build for rental, some 8,000 have been put on hold until the consequences of the law become clearer. Spain’s Association of Rental Property Owners also contends that the bill would limit housing supply and reduce investment.

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