The most common way to rent a home: a private person who has a property puts it for rent to obtain benefits through a real estate, which is responsible for all management in a professional way: paperwork, coordinating visits, performing the contract, speeding up the rent…
These are the advantages of renting, as a tenant, a apartment to a private through a real estate agency:
- The duration of the contract shall be five years. According to the Urban Leases Act (LAU), the duration of the rental contract if a private person is rented is five years.
- You will have a wider offer of available housing. Since most private owners are willing to choose this option when renting their home, you will find a wide range of real estate, and in good condition, since the real estate reviews and verifies the good condition of the property
- The tenant has greater bargaining power. «The negotiation in the rental market»34% of those who rented a house last year managed to negotiate the price
On the other hand, main disadvantage of this format is that agencies, always or almost always, charge a fee to the tenant. The percentage that is usually paid is between 8% and 10% of the annual income. In other words, if a house is to be rented for 1,000 euros per month, the tenant who enters the property must pay for the real estate expenditure between 960 and 1,200 euros.
Pros and cons of renting a house to a company
And what about this less typical way of renting a property, is it interesting for the tenant? We remember that these companies can be socimis (you may read it out there written in English as REIT, of the signs Real Estate Investment Trust), investment funds or companies that seek to make a profit on real estate assets from which they own.
According to the law, societies which have the following objectives are considered to be partners: «The acquisition and promotion of urban real estate for rent. Promotion activity includes the rehabilitation of buildings in the terms set out in Law 37 / 1992 of 28 December 1992 of the Value Added Tax». It is estimated that only 4% of the rental housing stock is in the hands of this type of company.
So you can get an idea, rent a house through these companies offers the following advantages:
- The duration of the rental contract shall be 7 years. According to the LAU, if the owner of the rental house is a legal person, that is, a company, duration of the rental contract shall be 7 years
- Management costs are not charged to the tenant. Unlike real estate agencies, tenants from a flat rented to a company must not pay the management costs, but the owner of the property is responsible for paying this cost.
In contrast, in this case, the tenant has less power to negotiate the conditions. There may be a possibility of a reduction in the first year, although its price would increase from the second year.
Advantages of the partners for investors and the real estate market
So far we have seen the advantages of these societies for the tenant, but How do they favour the market?
Sociis are created to activate the real estate market, so they have tax advantages
- They encourage the increase of housing for rent
- Modern market price increases
- Investment instruments for savers increase
- They are a regulated and transparent investment
- Cuentan con un menor riesgo en cuanto a liquidez (puedes vender tus acciones de forma fácil)
- Existe la posibilidad de diversificar en distintos activos inmobiliarios
- El importe de la inversión es menor que en la compra tradicional de inmuebles
- Están creadas para activar el mercado, por lo que disponen de ventajas fiscales