Why are Madrid’s apartment rental prices skyrocketing?
Some people attribute this change to the “Airbnb Effect”. This is when there is a density of tourist holiday rentals it drives up the cost of long-term rentals when landlords prefer to let their property for short-term rentals and earn more money.
Everywhere around the world people are rallying against this phenomena. In previous years it has been most notable in Barcelona when residents turned out to protest against Airbnb and graffiti stating “Tourists go home!” started appearing in popular tourist areas of the city.
An Airbnb spokesperson rejected the concept of the “Airbnb effect” stating that the prices would have risen with or without the presence of Airbnb, they stated that “In Barcelona there are a million apartments, we only have 17,000 rental apartments in the city, a number too small to have an impact on the general prices of rentals in the city.”
EL MUNDO newspaper gives several reasons for the rising rent: one is the end of the three-year maximum contract length, coupled with the new Urben Rental Law (Ley de los Arrendamientos Urbanos) from 2013 which allows landlords to increase their rents on a yearly basis. Another reason is the tough requisites for mortgages and finally the loss of aquisitional power with salaries only increasing by 10 euros since the beginning of the crisis. According to the website Fotocasa, madrileños spend 41,6% of their paycheck on rental costs.
Spain does not have a house-sharing or rental culture and most young people are encouraged to move out of home only when they are able to purchase their own property. With the crisis and growth of income and contract instability, this has made it impossible for many young people to purchase their own homes and the high cost of renting has made it difficult for people to survive in the city.
Spanish people and foreigners complain about the lack of homes for rent, in an interview with El Pais, Álvaro Sánchez, a 29-year-old self-employed architect says “sometimes we don’t even get to see the houses when we call they are already taken. I’ve seen people renting apartments by telephone, without having even seen the apartment. Landlords are increasing their demands before agreeing to rent their properties (demanding paychecks, months and months of deposit and insurance etc.). I’m sure that his experience resonates with the experiences of many frustrated auxiliares and expats moving to Madrid, only to find themselves paying for Airbnb while frantically searching for affordable accommodation.
Residents of neighbourhoods affected by Airbnb are petitioning the Community of Madrid to enact tougher restrictions on Airbnb, requiring homes to be fitted with heating, fire extinguishers and to have civil responsibility insurance as essentials, with a fine of 300,000 euros for not complying with these regulations. Furthermore, the Ayuntamiento de Madrid have limited the days for tourist rentals to a maximum of between 60 and 90 days (still to be confirmed) and landlords must obtain a license for third-party use of their property.
The next predicted trendy area is going to be Lavapies, which has become “the hotel of Madrid” according to Fernando Encinar, co-founder of Idealista. He believes that this will regenerate the neighbourhood and provide value to those who want or have bought properties in this area.
Gentrification means that neighbourhood businesses that were once tied to the residents are replaced by businesses that only focus on tourists, this results in the loss of small grocery shops, small businesses and no-frills bars that once catered to locals. These have now been replaced by hipster bars, restaurants and designer shops. This along with rising rent prices also drives away locals who may have spent their whole lives in the same neighbourhood but can no longer afford to live there.
Studies reveal that in the centre, the local resident population has decreased by 9% due to rising prices. Lavapies and Embajadores reflect a loss of 11% of the population.