The health emergency caused by COVID-19 inaugurated a new world order in all aspects of life. Looking for a property has an impact on it. In fact, this new indefinite situation has been called the new normal. The real estate sector does not escape the changes introduced by the pandemic.
Search for a property in the real estate sector in Spain during COVID-19
The real estate sector has been one of the most affected by the coronavirus issue. In an article by Caixa Banks, economist Judit Montoriol-Garriga affirms that sales purchases decreased by 39.2% in April 2020. On the other hand, construction works also received a negative impact. The few works already in place were resumed, but new projects lagged behind.
Rents were less affected as the purchasing power to buy a home declined with the spread of the virus. This has complicated looking for a property in a way. The economic stability required to acquire long-term financial commitments was relegated to a small sector.
However, the migration to teleworking is setting new guidelines when it comes to selecting housing. The tenants undoubtedly transformed their acceptable parameters as the house became a permanent office.
How the real estate sector will be in Spain by 2021
The general secretary of the APCEspaña employer’s association, Daniel Cuervo, affirms that the construction activity will be very compromised. According to the specialist, the number of visas to build houses has fallen by 30% until September 2020, which will hit production in 2021 and 2022.
The rental income is going to decrease in the big cities like Barcelona, Madrid and Valencia. In 2020, prices fell by 12% in Barcelona and 8% in Madrid, as explained by the Fotocasa page. This is due to the increase in supply that has grown by close to 50% from September 2019 to the same month of 2020. The trend will continue to intensify in the coming months.
A large number of tourist rental properties have been used for the traditional medium-term contract. This situation creates a highly competitive market.
Finally, for those who want to buy, accessing a mortgage will be difficult as the conditions have become strict. People with little savings and uncertain employment status will not be selected for the loan.
Rent differences 2020 vs. 2021
We see clear differences between last year and 2021 in real estate. Among these different we find:
• Teleworking: before the appearance of COVID-19, teleworking had taken hold and increased after the pandemic. Caixa Banks admits that 36.6% of Spaniards work from their homes. Consequently, people’s demands are focused on energy saving, space distribution, the spaciousness of the structure and its versatility to suit the job.
• Tourist rentals: at the beginning of 2020 the rentals of tourist stays were in full swing. In 2021, these flats are expected to remain empty, to be used for sale or mostly for the transfer of conventional rent.
• Increase in supply: in September 2020 Servihabitat recorded a 50% increase in rental stock. It is estimated that it will continue to increase for the following year along with the decrease in rental prices. The reduction will remain in trend until the availability of leasable sites begins to decline.
Rent laws in Spain 2021
The Spanish government has decided to regulate the rent with new laws. The national executive has announced that it intends to put a cap on rental prices before March. In this way, various issues for rentals can be addressed this year.
The laws that are already in place are:
• The extension of contracts was increased from three to five years if the landlord is a natural person. In the case of a legal entity, it is increased to 7 years.
• The rental price may not exceed the IPC until the contract ends.
• The notice of non-continuation of the contract must be made four months in advance by the landlord and two months by the tenant.
• If there is an advance sale, the contract must be respected.
• If the tenant dies, family members can remain in the home in situations of social vulnerability.
• The landlord can only request a monthly rental deposit.
• If the landlord is a legal entity, he is obliged to pay all the expenses arising from real estate management.
• In case of social vulnerability, the landlord will not be able to carry out an eviction until social services take the pertinent measures in a month or two if the owner is a legal entity.
Tips for looking for a property in Spain in 2021
I am taking into account this apparent “new normal” that is being lived, we give you some tips to get the most out of your home:
1. Look for a good layout: it doesn’t matter if you have a budget for a small or large place. Focus on the design having large spaces. This factor is important to avoid the feeling of confinement and despair in times of quarantine.
2. Find a place of work: ensure that the property is compatible with teleworking. Ask yourself if you could set up an office. Even if you do not work remotely, it is a point that you must consider.
3. Saving energy: now that you will spend more time at home you must reduce energy expenditure in general. Make sure your home has enough windows for natural light, plus green heating and cooling systems.
4. Good insulation system: tenants must make sure that the windows have a perfect seal. In this way, you will have a warm home in winter without having to turn on the heating throughout the day.
5. Storage space: since you will not always go shopping, having enough places for storage is key. A home can often become uncomfortable when there is accumulation of objects.
The real estate sector is now governed by new rules, which does not mean that renting is an impossible task. This creates modifications when searching for a property. In fact, this branch has been favored due to the fall in sales prices. The key is to soak up the new rules of the game so as not to be left out of the current market.
The living conditions that have marked this so-called “new normal” have set a pattern that cannot be ignored when choosing a home. Remember that the readjustment to the world crisis should not be negative. Only an order has been established that requires greater adaptability to confinement. It requires a broad design, migrating to green methods and fitting it with the job.