amideislas

I don't know if that's really a factor. Most Mallorquin owners write IBI and basura into the contract as an obligation of the tenant, and refuse to negotiate at all - even when their asking price is far higher than the norm. There are so many overpriced rental properties sitting empty here, it's laughable.

I've always wondered what their rationale could be. I tend to think it's just wishful thinking. A reasonable income from a property is far better than zero while it rots away...

whitelinen

Owners could earn far more by renting it out to tourists for 12 weeks a year.

There is always a reason why people do not do what you think they should

davidinspain

The same here in Spain

casa del sol

Why a house is not an investment, a house is a home, things go up and down. Buy a car and it loses value, doesn't stop people buying a car to use.

It is the banks that lose when debt is used to buy, because the banks own the property.

Anyone who lives in a house that goes up in value does not work for that increase, it is free equity. If they sold a place and used the equity made to purchase something else, there is no guarantee of it always rising in price, value can go up, or down or sideways. The only price that matters is the price you buy it at and the price you sell it at, anything in-between is hearsay. Different times different situations.

So feeling guilty or sorry should not enter into it. Anyway about time prices came down to normality, something about 3 to 4 times local salary, means more working people can then afford to buy something for their families. Live in it longer term and there shouldn't be a loss, things should eventually even out over time. That is why it is so important to find the right property in the right place, therefore renting first for those that don't know the area is a must.

Porth

In France a house is a place in which to live. In the UK it is an investment! Much so as a placing in the Telegraph as to the estate that someone who is no longer with us has left.

Differing mentality who is to say who is correct?

Fredbargate

When I first tried to get on the property ladder the maximum mortgage was 2.5 times annual salary with no extra for the wife ( She might get pregnant ).

At that sort of rate there would be lots of affordable property but little investment value.

Mind you shortly afterwards the mortgage rate went up to 15% plus

Albir_Tom

It's just the difference between people who go into property as an investment and people who are not thinking about money side of things.

If your a property investor you never just look at bricks and mortor as something to live in. Not after you buy your first one anyway.

Horlics

I don't see why it's so hard to understand why people would leave a place empty rather than settle for a rental below their target price.

Rental is hassle and leaves you open to unexpected expense. A person may put a value on the hassle and decide that it's not worth it below a certain price.

Regardless, clearly the people who would rent at 550 and leave it empty after offers of 500 don't need the cash. What's so hard to understand about that?

Whitelinen is right.

Porth

Of course both in France and Germany house-owning is not at the top of the 'housing' list but rental is!

We rent houses albeit in France and the UK to others. We do not see the hassle but of course others do. We have in the UK the same tenant in one of our houses and he has been there for fourteen years.

As in houses rental values have ceilings.

Whilst in Spain last year our Spanish neighbour (in French!) said to me yes summer rentals are fine but the hassle and here true hassle of either weekly or fortnightly hand overs was a problem. Then someone resident in the UK did have hassle for say in the Thames Valley could not and was never quite sure of the quality of the hand overs. So both went long term rental with bonds and with a local agent on hand.

amideislas

I agree in principle (regarding hassle for owners), however, that's changed a lot, and now owners can evict tenants if they are not paying or are causing damage. A few years ago, that was impossible. You were stuck with them.

I also have the benefit of hearing all the moaning. People listing homes for rent (or sale) at double or triple the market price, and then moan that nobody wants to pay a "reasonable" price for it. Well, it may seem "reasonable" to the owner, but when tenants can get something much better at half the price, people just won't pay it.

Some of it is simply people still living in the good old days when the market was booming, or naively taking the highest priced urban location in the region and applying it to their property somewhere in the campo. Or...just pick a price out of thin air, without regard to what the market price is for that class of property and location.

I think that supports the notion that locals just don't consider the value of their properties in realistic business terms.

Another problem is friends and family lying about their successes. I know of at least one owner who had a property on the market for several years, at about 3x market price, but eventually (quietly) accepted an offer for about normal market price.. but told everyone she got her millions out of it. Naturally, her friends and family had properties listed for ridiculous sums within weeks.

Just out of touch with reality. That's all. But the market eventually straightens them out.

cricketman

The truth is that rental prices are so low in Spain that often it isnt worth the hassle to rent them out

My parents in-law have an empty flat which they "value" at 250k

Similar flats rent out for 500-550 euros per month

Out of this, my parents-in-law have to pay 150 euros IBI and 200 euro community fees per month. And will need to pay income tax on what they receive and landlord insurance.

They say it isn't worth the risk, tenants may trash the place or stop paying rent and even if they are good tenants, things like kitchens and bathrooms wear out and applicances need replacing.

They would rather have it empty and keep it up for sale for years and years hoping for that one elusive buyer. Millions of people across Spain feel the same way

IamStu

I personally know of many such cases. Land lords are often left with repair bills/utility bills far higher than the money they´ve taken in rent. Then there can be the legal fee´s aquired in order to remove a non-paying tenant. That in itelf can take a year during all of which time, your futures bills are increasing as you´ll be left with unpaid electricity bills etc!

Moses2013

Don't agree there. In Germany more people want to buy these days and the properties that are rented all belong to people who bought them.

amideislas

Well that explains why they put them on the market for 3x market price, wasting the time of numerous rental agents in hopes of netting that one naive sucker who will gladly overpay. After all, rent for a studio in London is about the same as a palace here, so it looks cheap to a certain group of prospects.

I know at least one agent who will accept and list the overpriced ones just to keep his website full of listings. But he'll refer all incoming inquiries to his sensibly priced offerings because he knows it's not worth his time to try to close them on the overpriced ones.

amideislas

Germany used to be almost entirely rental-oriented. Unfortunately, property prices have for years (until now) remained pretty stagnant, so buying property as an "investment" hasn't been nearly as interesting as say, England.

Depending on region, rents can be pretty astronomical, so owning for the purpose of rental income is a good investment, but most people first need a place to live, and most still can't afford to buy to just to rent it out for income.

But that's changing. Property prices are rising now, and so more and more Germans are seeing a defined "property ladder", and are more inclined to try to buy rather than pay high rents.