Tuesday, December 19, 2006

Somebody asked about rent control in Spain, so I thought I'd look it up. And whaddaya know, there's a monograph in English on the subject available on the Net. It's not well-translated and is written in a highly legalistic style, but this is what I gleaned:

Only about 11% of Spanish households rent their dwellings. One-third of new dwelling units are purchased for investment purposes. In places with little government regulation, a person who buys a place for investment purposes (what the left calls "speculation") rents it out, in order to receive a steady income, until he decides to sell.

In Spain, however, the minimum lease on a dwelling unit is five years, and the rent can only be raised annually by the rate of inflation. So if the housing market is gaining, say, 10% a year in value, and you're the landlord and you can only raise the rent, say, 4% a year, you're losing money. And you can't sell the place until the five years is up. Meanwhile, there are lots of persnickety little clauses regulating what the landlord can do.

These laws, of course, make it unattractive for people who own vacant dwellings to rent them out. So there aren't many places to rent, and the ones out there are pricey.

By the way, if you were lucky enough to rent your place before 1985, you can stay there forever and they can't raise your rent more than the rate of inflation. No tenants ever give up these rental contracts, and this of course keeps a good chunk of rental housing off the market.

In last Sunday's issue of the Vanguardia, which is the big classified-ads day, there is only one page of flats for rent (compared to about 30 of flats for sale) in the whole Barcelona metro area, Here are a few of the flats on offer here in Gràcia:

75 square meters, €1200
3 bedrooms, €950
4 bedrooms, €900
80 square meters, 3 bedrooms, €1080
2 bedrooms, €800
Studio, €700
60 square meters loft, €900
Studio, €800
4 bedrooms, €1000
3 bedrooms, €900
2 bedrooms, €850

Not awful by London or New York standards, but this is Barcelona, and lots of middle-class white-collar people only earn €1000 a month.

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