Landlords in Europe A Comparative Analysis Launch Event 12 November 2013 European Parliament
About UIPI: Union Internationale de le Propriété Immobilière (UIPI) – Founded in Paris during 1923 – Headquarters transferred to Brussels in 2006 The UIPI represents: – 5 million property owners – Covering more than 20 million dwellings – Through 30 member associations – Across 28 countries Our members include: – 3.5 million private landlords (both domestic and commercial) – 1.5 million home-owners and condominium co-owners
UIPI Member Associations: Albania Ireland Austria Italy Belgium Monaco Bulgaria Norway Croatia Poland Cyprus Portugal Czech Romania Republic Serbia Denmark Slovakia Estonia Slovenia Finland Spain France Sweden Germany Switzerland Greece UK
Objective of the Analysis: Increase knowledge of the Private Rented Sector (PRS) – Academic and theoretical research already exists – Focus on PRS from a practitioners point of view – Highlighting the key issues which landlords face Improve understanding at all levels of Government: – At Local, Regional, National and EU levels – All with different legislative frameworks Promotion of housing policies which create: – Good quality, affordable private rented housing – And a stable and sustainable sector across the EU
Relevance for Policy Makers: The Private Rented Sector plays a crucial role in: – Providing essential accommodation for European citizens – Supporting the European economy Increasing interest in the sector from Government: – Credit crunch caused affordability issues for home-ownership – Resulting in a significant increase in the demand for rented housing – 18.1% of European households lived in the PRS in 2011 European context: – Although not within EU competence – Increased focus on housing market and property taxation – Through policies such as European Semester – And work undertaken by URBAN Intergroup
Scope of the Analysis: The analysis focuses on: – The main characteristics – Strengths and weaknesses – In national regulation Looking in particular at: – Legislative Frameworks – Property Taxation – Planning and Zoning
12 Case Study Countries: Austria Belgium Czech Republic France Germany Greece Ireland Italy Norway Slovakia Spain UK
Legislative Frameworks: Creating a Tenancy Determining the rent: – Only 5 countries have laws regulating the initial rent – Limited right to increase rents during the tenancy in 7 countries The form of tenancy agreements and negotiable clauses : – More than 80% of countries require written tenancy agreements – Most countries allow parties to negotiate clauses in the tenancy – Additional requirements on the contents in some countries – Registration of the tenancy is necessary in 5 countries Security deposits: – Security deposits are common across all countries – 10 countries have regulations governing the amount, use and repayment of deposits to tenants.
Legislative Frameworks: During a Tenancy Contractual duration: – Regulations governing tenancy duration exist in all countries – Freedom to negotiate is stronger in 3 countries – Fixed term contracts exist in most countries – Minimum statutory period on tenancy exist in 8 countries – Unlawful to set a minimum duration in Germany Maintenance and repair obligations: – Landlords are usually responsible for maintenance and major repairs – Tenants are required to inform landlords of defects
Legislative Frameworks: Ending a Tenancy Termination practices: – It is much easier for tenants to end tenancies than landlords – Fixed-term tenancies end on expiration in some countries – Most countries require landlords to provide legitimate reasons – France and Italy do not allow termination by the landlord; only the refusal to renew the contract Regaining possession through the Courts: – Landlords must usually follow a two-stage process – Process takes between 6 months and 3 years – This can be sometimes an extremely expensive process – Some countries have accelerated procedures for rent arrears
Legislative Frameworks: Residential Overview Pro-landlord Neutral Czech Republic Pro-tenant United Kingdom Greece Slovakia Austria Norway Belgium France Germany Ireland Italy Spain
Legislative Frameworks: Commercial Tenancies Significantly different to residential tenancies: – No weaker party, so no need for protective provisions – Greater contractual freedoms to negotiate clauses – No regulation of initial rent levels – Rent increases only regulated in 4 countries – Less restrictive termination rights Exceptions and restrictions: – Restrictions on minimum duration vary considerably – Greece has the longest minimum tenancy duration – Refusal to prolong tenancy requires compensation in 2 countries – Belgium and France have stricter provisions than residential tenancies
Legislative Frameworks: Commercial Overview Pro-landlord Neutral Czech Republic Pro-tenant Germany Austria Norway Ireland Belgium Slovakia France Spain Greece United Kingdom Italy
Taxation: Buying and Selling Purchasing property: – All countries levy a tax on the purchaser except Slovakia – Either a Registration Fee, Stamp Duty or Transfer Tax – Most countries base tax on purchase price – Actual property value is used in some countries Selling property: – Capital Gains Tax (CGT) exists in all countries – Most countries treat CGT as income tax at the same rates – However, a separate Capital Gains Tax is levied in 4 countries – Most countries have some exemptions or reductions to CGT KEY: Housing stock is most efficiently used in countries with the lowest transaction taxes
Taxation: Using the Property Rental Income: – Taxed at the same rates as other income in many countries – Rates depend on whether landlord is an individual or corporate entity – Spain and Norway use net income as tax base – Common expenses can be offset in these countries Recurrent Property Taxes – No trends exists within case study countries – Tax is based on property value in most countries – Rates vary significantly (percentages or fixed fees) – Most are levied on landlord (except UK) Other indirect taxes have not been addressed – Value Added Tax (VAT), Inheritance Tax (IHT), etc.
Planning and Zoning: Planning regulation: – Planning policy is designed to create enjoyable environment – Regulation is overly complex and not effectively used – Stringent obligations placed on landlords at all stages – Property owners play limited role in policy formulation – Greece has an extremely complex planning system Obtaining consent: – Implementation of planning regulation is decentralised – Planning permission required for new buildings in all countries – 4 countries have mandatory requirements to consult local residents on all applications
Expropriation: Strict rules exist on Expropriation: – Universal Declaration on Human Rights – European Convention on Human Rights All countries have some powers of Expropriation: – Governments must demonstrate public need outweighs human right – Fair compensation must be provided – Expropriation must take place in a timely manner Compensation for property owners: – Determination of compensation is problematic in many countries – Expropriation is very rarely used in Germany or UK
Conclusion: Europe has a diverse rental market: – “ O ne size fits all” policies will be detrimental to most markets Stable and sustainable renting: – Onerous legislative and tax burdens result in diminished supply of affordable housing – Complex legislative frameworks discourage investments in the private rented sector Future policy considerations: – Simplify tenancy, planning and building norms – Avoid excessive taxation of property compared to other forms of capital – Balance the needs of all housing tenures and not to distort the market
Many thanks for your attention! International Union of Property Owners (UIPI ) 76, Rue du Lombard, Brussels, 1000 Belgium Tel: +32 2 502 23 18 Email: brussels@uipi.com Web: www.uipi.com
Recommend
More recommend
