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“We need to increase legal security for owners in order to have more properties in the market"
04/08/17

Following the decision of the TSJC (Supreme Court Justice of Catalonia) that reverses the tax imposed upon empty rental properties approved by the Barcelona City Town hall, we interviewed Alex Vázquez, director of the Residential Rental Department of Forcadell, to learn about the reasons and personalities that make up the scenario of vacant flats in Barcelona.

The Supreme Court Justice of Catalonia (TSJC) has reversed the tax for empty flats that the Barcelona City Town Hall had approved last September to tribute those rental properties that had been unoccupied for more than two years without justification. The sentence considers that the municipality of Ada Colau, current mayor of Barcelona, exceeded its powers. As established by the Estatut d'Autonomia de Catalunya of 2006, this competence corresponds to the Generalitat; the Town Hall can only apply taxes on public or social housing. The Barcelona City Town Hall argues that, in a situation of housing emergency, having empty flats is an anomaly that they will not allow.

We talked to Alex Vázquez, director of the Residential Rental Area of Forcadell, to learn about the reasons and personalities that make up the empty flats scenario in Barcelona.

"The municipality sees in the great property holders the ideal opportunity to balance the scale, and for that reason the Town Hall seeks their cooperation, and asks them to lower prices or submit their rental properties"

Do you think there is an excess of empty flats in Barcelona?
Quite the opposite. Barcelona has a minimum stock of residential housing.The problem comes because public-social housing policies have not been more actively promoted in recent years. Actually, if there were social housing flats in Barcelona, we would not be talking about taking this type of measures.

 

Can you offer an outline of the situation?
Of all these years in which almost no social housing has been built, here in Barcelona and throughout Spain in general, we have tried to respond to the situation with second hand housing, flats already built. The municipality sees in the big property holders - who still have promotions and vacant buildings - the ideal opportunity to balance the scale, and that is why it asks them to collaborate by lowering prices or submitting their rental properties.

 

To whom was the vacancy tax addressed?
This measure of the municipality was focused mainly on the large property holders; it did not seek to penalize individuals. The great property holders of Spain have a large volume of housing, among the most important are CaixaBank, with 38,000 flats. They are followed by Lazora (11,500), the REIT Blackstone (10,500) and Banco Santander (8,000), which was one of the banks that received an economic penalty for this cause last November.

 

But the banking sector has received plenty of help...
Yes, it is true. But if aids are agreed with certain conditions, later on you cannot impose a penalty for them.We must also bear in mind that if these rental properties have not yet been rented, it is because these great property holders have not wanted to do so, because in Barcelona if you put out a flat to rent, it is leased without problems almost immediately. Therefore, their objective is its sale and thus unleverage its real estate assets.

 

Do you think that vacancy should be penalized?
Although it is important to differentiate the great holder from the particular owner, it should not be penalized in any of the cases. The right to property must also be taken into account: the person who owns a flat can do with its property whatever that person considers best because it was obtained legitimately. An owner of a flat who is up to date with all current payments payments is free to decide, whether to rent, sale or decide to wait.

 

"There are many landlords who do not rent their flats, not because they do not specifically want to do so, but because maybe they have had a bad experience and do not want to take on those risks again"

On average, for how long is an apartment in Barcelona empty between one rental and the next?
Nowadays, between one rental and another, flats are empty for a month at most. In Barcelona, from the moment a tenant leaves the property, the owner reforms the flat again and the new tenant arrives, it usually takes no longer than a month. Since there is a high rate of demand, there is no problem to rent apartments in Barcelona.

Promoting policies that protect homeowners would help many of them put flats in the rental market.

Exactly, let's talk about solutions
Globally, the way to have more properties in the market is to offer more legal security to owners. Renting carries a part of uncertainty. Owners cannot be forced to rent their flats if they cannot be protected due to defaults and debts; to which one must add the expenses of hiring legal counsel in the event that it is necessary to vacate the apartment. While you can hire rental guarantee policies, that is still money that the owners have to provide.

The current legislation provides great financial security to the owner, but on a legal level it should contemplate improvements that provide better protection for landlords. Because there are a lot of landlords who do not rent their flats because they may have had a bad experience and do not want to take on those risks again.

 

Elena Busquets

Translation: Patricia Janer

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