Mental Rental: The nightmare of Barcelona’s housing market

Fasten your seatbelts – if you think the rental market is bad in Auckland and Wellington, it is probably only going to get worse.

Let us take a look at the city of Barcelona.

“There seems no end to Spain’s problems when it comes to its housing market. In the country where the bursting of a housing bubble led to a crippling financial crisis, now it is the rental market that is sparking social discontent.

Worst hit are the biggest cities, where rent prices have spiked to unprecedented levels. At the top of the price list we find Barcelona, where rent prices rose by up to 16.5% in 2016, according to the real state site Idealista.

A reform in the laws regulating rents in 2013 reduced the maturity date of the tenancy contracts from five to three years.

Those who are compelled to move house discover a voracious demand and offers get snatched up in a matter of hours. It’s a situation Rodofo Chacón, a clerk at an entertainment firm, knows well: last October he was told only fifteen days in advance that his rent would increase from 500€ to 850€. As it was impossible for him to pay such a price hike, Rodolfo, together with his wife (who is currently training and out of the job market) and their two daughters, had no option but to move. “It was seven months of sheer terror”, says Rodolfo of the time it took him to find a new flat.

Traditionally, in Spain, buying a house is considered an investment. Unlike other European countries, where larger proportions of the population rent, Spaniards tend to own their houses. But the economic crisis and the consequential fall in wages pushed many families to the rental market. “These families used to leave Barcelona because they were able to buy a house. But now they are forced to rent and they choose to stay in the city, close to their friends and family”, says Donat. It’s one of the factors that explains why many people in the market can afford such high prices.

But among young professionals, heavily affected by the fall in wages, the price spike severely disrupts their ability to live by themselves. Margarita Cavero, a freelance voice actress, is one of these young professionals. Since December she has been trying to leave her shared apartment and go live on her own. But she is not able to make ends meet: “Prices are prohibitive. I find very modest apartments, with absolutely no luxuries for 800€. I can’t pay that, but they get taken pretty fast anyway”, she says.”


So it is not just New Zealand having these problems. But Barcelona has something that New Zealand cities also have – or are moving towards.  They have a heavily regulated rental market that favours tenants.

And now Barcelona renters have another problem – and it just might happen here too.

“The next time you book a holiday apartment in Barcelona you may wake up to find an inspector standing at the end of the bed.

Amid growing evidence that the massive upsurge in tourist apartments is driving rents up and residents out, the city has launched a crackdown on illegal, unlicensed apartments, and Airbnb, the dominant platform, is in the eye of the storm, although not the only offender.

According to the council, there are about 16,000 holiday rentals in the city, of which nearly 7,000 are unlicensed. Last year Barcelona fined Airbnb €600,000 for continuing to advertise unlicensed flats on its platform.

Peter Huntingford, public affairs spokesman for Airbnb, categorically denied claims it had not cooperated with Barcelona. “We are committed to being good partners to cities and have worked closely with officials in city hall and the Generalitat [regional government],” he said.

“Legislation needs to differentiate between regular people sharing their homes and professionals running a business.

Airbnb has consistently claimed the majority of its clients are simply homeowners trying to make ends meet, but there are many who dispute this.

Property owners can make five times as much renting to tourists as to residents. ”

The Guardian

I started to write this article before our Minister of Finance decided to behave like a student activist and wallpapered his Wellington office windows with letters from disgruntled Wellington tenants. He seems to have forgotten that, as the MP for Wellington Central, he represents all those evil landlords as well.

Barcelona is a popular tourist city in Spain. But New Zealand had over 2 million visitors in 2016 – and finding accommodation for them all is difficult, particularly in the high season.

And these days, the tourists don’t just go to Queenstown and Rotorua. They go everywhere. Walking trips to Abel Tasman National Park, visits to the Lord of the Rings sites, whale watching in Kaikoura – you name it – they come here and do it.

So what are the chances that some of those ‘greedy’ landlords will simply pull out of the local market and start renting to overseas visitors through Airbnb?

Airbnb offers a different kind of travel experience, where tourists stay in houses, rather than hotel rooms. They can do their laundry, cook favourite meals, and generally see a different side of New Zealand than the view from a motel room. It is a home away from home – even if it is only for a night or two, and works particularly well for families or other groups.

Be careful what you wish for, Grant. As Barcelona has found out, regulating the rental market too much has just pushed landlords into the arms of tourists – who pay more, stay for a shorter time, agree to the rent up front, generally do less damage – and then go home and recommend the place to all their friends.  It doesn’t matter if the house is not rented out all the time – if the nightly rate is 5 times that of a local rental, the return is still good – and there is less wear and tear on the property.

Barcelona has an issue with ‘unlicensed’ holiday rentals, but as far as I know, this would not be a problem here. So, there is nothing stopping a property owner simply listing a property with Airbnb (or similar) and raking in the cash. And properties in large cities – central Auckland and central Wellington, for example – will probably do particularly well with tourists for short-term stays.

Here is the other thing. It will be the good properties that will be put onto the tourist market. All those uninsulated houses with rats, mould and holes in the wall will still be available for local tenants. And then, when the rental WOF becomes mandatory, they will simply be sold off to first time buyers, who will be grateful to be able to enter the housing market. And the first thing they will do is buy is a pack of rat poison and a bottle of bleach.

Seems like a good deal all around to me. Unless you are a tenant, that is.

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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

To read my previous articles click on my name in blue.