Despite Spanish rents rising there are still some residents able to enjoy paying fixed rental contracts from as little as €7 a month.
These fixed rental contracts were signed before May 9, 1985. Thirty-five years on, there is only a handful of these fortunate tenants left in Madrid, and most prefer to keep quiet, perhaps fearing the envy of neighbours who are paying so much more.
For the landlords, these units have proved an enduring headache. But De Ulibarri, a 40-year-old tax attorney, is one of a number of investors willing to risk taking the properties off their hands. He is the president of Almagro Capital, a Real Estate Investment Trust (REIT) with a portfolio of 48 properties, sizeable enough for a margin of error.
The REIT calculates the tenants’ life expectancy, buys the properties, then waits for them to enter the market, when they can expect a return on their investment. ‘Might we have to wait until 2050 in some cases? Well, we’ll suck that up,’ says De Ulibarri.
The eight apartments in Madrid have been purchased from Sareb, the company set up after the property bubble bust to help banks offload their toxic real estate assets and mentioned in our article last week ‘Cheap Spanish Apartments Released by Government’.
All the fixed rental contract units are located in Centro and Chamberí, the two most expensive districts of the capital, where according to the online real-estate site Idealista, a 76-square-metre unit will go for €1,421 and €1,375 a month, respectively. A spokeswoman for Sareb says they have fewer than 100 old-rent properties across Spain out of around 50,000, and the package bought by De Ulibarri was the last of them in Madrid.
These kinds of fixed rental properties are not registered as such anywhere, but the number of individuals in the Madrid region paying rent far below the market price represents 2.7 per cent of the population, according to a National Statistics Institute (INE) Standard of Living survey, though that figure also includes other groups such as those on subsidized housing.
Overseas property investors interested in a long-term investment may wish to contact Sareb to see if any fixed rental contact properties remain available.
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