The housing market in Spain has a new favorite: the build to rent phenomenon. As its name suggests, it is based on the premise of building new homes to be used solely for rent. The trend, which was born in the United Kingdom, is attracting the interest of many investors, both national and international.
In Spain, the promoters of build to rent have found a market in which rent is becoming increasingly important. They seek to meet the demand generated by many young people (and not so young) who have put aside the idea of buying and are looking for quality rental homes in which to settle in the long term.
The bases of the build to rent
These are primarily residential units that have been specifically built for rent. Therefore, they are made of resistant materials that do not damage over time, instead of others that are more attractive at first glance, but less durable.
But this is not the only thing that defines the build to rent. According to the professional services firm EY, these homes are newly created, have a single owner who owns all the units (usually 50 or more for each complex) and are managed by professionals, since they operate as a business.
In short, these are large housing complexes created and designed for rent, with competitive prices and managed by companies. The phenomenon gives a twist to the traditional rental system, which is highly fragmented and uneven, having been distributed among small owners for years. In Spain, without going any further, 95% of rental homes are owned by individuals.
A market that embraces rent
As we mentioned, the build to rent phenomenon was born in the United Kingdom, where high prices limit the purchasing power of a large number of the population. The same happens in our country. One in five Spaniards lives on a rental basis and 17% do not plan to buy a home in the medium or long term.
Behind these data are job insecurity and high sales prices, but also a sociocultural change. Many young people do not contemplate the idea of taking a mortgage or living in the same place their entire lives, so they bet on rent.
According to Fotocasa's report "Rental experience in 2017-2018", the profile of the Spanish tenant is a woman, between 25 and 34 years old, of an upper middle class and with monthly income between 10,000 and 20,000 euros. When looking for a home, give importance to the price and not having to invest in reforms.
However, much of the offer does not meet your expectations. According to the same study, 78% of those surveyed indicated prices as the most common difficulty in the rental process. 49% also referred to the poor condition of the homes. Problems that could be solved by the build to rent phenomenon.
How are these houses?
In general, they are small, comfortable and with many services. They are designed to meet the needs of new generations of tenants and built to last for many years in good condition.
According to Knight Frank's ‘Private Rented Sector - Spain 2019’ report, design is essential to achieve these goals. It should contribute to creating communities and improving efficiency in buildings dedicated to rental, in general.
The idea of creating communities is very important so that the tenants are comfortable and stay longer. For this reason, the build to rent complexes consist of numerous common spaces. "Common areas should include work spaces, community terraces and gyms," they explain in the study.
“Rather than generating additional income, the goal of these facilities is to create a sense of community. All these aspects help the tenants to know each other better and, therefore, to stay in the long term ”.
Having all these common areas makes buildings more efficient, since many of the services that used to be offered individually in each home are now found in common areas. Materials also play a key role in achieving efficiency. “They must be as resistant as possible. The finishes must be of high quality, easy to maintain, easily replaceable and durable ”.
Another strong point of these complexes is their diversity, to accommodate from young professionals to families with children. The construction of buildings for student or elderly residences and offices, for example, is also contemplated.
Its advantages
For investors and developers, the build to rent is presented as an opportunity to take advantage of the rental boom. For their part, it offers tenants the possibility of accessing homes in good condition, with competitive prices and in the long term.
It is, in short, a way to professionalize the rental market. It may be that in the coming years we will already see some examples in our country, since everything indicates that the build to rent is drawing, and a lot, the attention of investors.
