·               ·        It consists of renting the house, living in another apartment for rent and buying a third property

• The Euribor resumes its falls in October and marks new annual lows of over 2.7%

• Is it a good time to buy a home?

Authors: Alba Brualla and Luzmedia Torres

Source: Expansión 10/2/2024

The rental market in Spain is preparing to receive a new investment boom. Although this sector is going through a delicate situation since the approval of the Housing Law, the truth is that it is in a sweet moment for those who want to bet on housing as a formula to achieve a safe return.

The strength of the sector is such that one only has to look at what is happening in the sales market, where with a drop in operations, prices continue to rise. This same increase in the cost of housing is leading to fewer and fewer people having the capacity to buy and therefore remaining as users of rentals, putting greater pressure on demand. In this context, in which all experts point out that the demand for rental apartments will continue to rise, a new investment model known as “triple rent” is emerging in Spain.

Until now, the traditional strategy of a buyer was to focus on selling their habitual residence to buy a new, larger one, but in this operation, the purchase and sale costs and the tax element must be taken into account, which significantly reduces the profitability of this operation.

For this reason, the real estate brokerage sector is betting on the new formula. “We have more and more clients to whom we are proposing a triple rent,” explains Jesús Martí, director of the large accounts area of Alquiler Seguro.

What does triple rent consist of?

As its name indicates, it is a process in which there are three real estate operations. “The first operation is to rent a flat that suits your new needs of current life, so you become a tenant. The second operation is to rent out your habitual residence. With the remainder or opportunity cost that you have not used when you were looking for a flat to buy a larger house and make the initial payment and assume the costs of buying and selling, renovation, etc., you intelligently use that money in a third operation to buy a house as a cheaper investment. Even outside your city, to rent it out and obtain a return without losing your capital” explains Martí.

This formula is becoming more and more popular in the market and Alquiler Seguro has already opened a new line of business that they have named Invermax, to advise and accompany the client. “It is the option that really allows you to invest in rental housing” says Martí.

Practical example

As a practical example, the manager points to a couple who need to buy a larger flat in Madrid due to the birth of a child. The apartments that suit them cost 525,000 euros and the necessary renovation would take the total cost to 590,000 euros. However, with the same characteristics and in the same neighbourhood where they want to buy, they can rent a house for 1,600 euros and put their current house up for rent at 1,200 euros, so they must assume a cost of 400 euros per month.

At this point the third rental comes in. The money they had saved to pay the down payment on the 525,000 euro house will be used to invest in the purchase of an apartment in Oviedo for 88,400 euros that they will rent for 560 euros per month. As a result of this triple operation, the couple will be able to pay their rent in Madrid and even obtain a monthly profit while becoming owners of two houses.

Good time to buy a house

Regardless of how the investment is made, the sector assures that it is a good time to buy a house. “We are facing one of the best situations that we are going to face with this de-escalation of interest rates that the European Central Bank has started,” says María Matos, director of studies at the real estate portal Fotocasa.

This feeling has already reached the market since the real estate portal sees how “the home buyer has launched into investing and the percentage has doubled from 7% to 13% in the last year. We perceive a lot of appetite in this market because it is safe and is one of the country’s economic drivers and engines. Investors invest in these assets attracted by the resilience of the sector with a view to also creating future assets and obviously looking for less vulnerability,” explains Matos.

Although, the expert warns that “we have to pay close attention to profitability because the scarce supply has a very negative part, but we are also going to have high returns above other assets such as government bonds or bank deposits. We are talking about average national returns of around 6.4