Investing in Socimis to expose yourself to the real estate market without large outlays has a new risk: the regulatory


As the economy begins to recover from the COVID-19 pandemic, concerns about inflation are beginning to surface in the press and among investors. Socimis provide natural protection against inflation.

Rents and real estate values ​​tend to rise when prices do, due in part to the fact that many leases are tied to inflation. This supports dividend growth and provides a reliable income stream even during inflationary periods.

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Aside from being an excellent hedge against inflation, there are several other good reasons why Socimis should be in the portfolio of long-term investors. For starters, they can be a reliable and growing source of income. Since most rent their properties long-term, they can be very well set up for stable income, quarter after quarter.

Definitely, there is much less variation in benefits well-managed companies than for most other companies, including those generally regarded as stable.

Socimis can be a smart way to add diversification to your investment portfolio. Technically, they are stocks, but they represent real estate assets, and real estate is generally considered a separate asset class that is not closely correlated to the stock market.

If you want to invest in real estate, Socimis can be a very easy way to get started since it is not necessary to acquire a property, committing a large capital, but rather a diversified portfolio of properties is accessed without this having to represent a high part of our assets.

What’s more, you have to take into account liquidity, buy shares of any listed Socimi with the simple click of a button and no ongoing maintenance worries.

But not all are advantages … there is a great risk that looms over this sector, the regulatory.

Regulation, the great risk for Socimis

Socimis were already in the government’s sights with the PGE 2021. First, for this year Law 11/2009 of October 26, which regulates Socimis, was modified this year. establishing a special tax of 15% on the part of the profits obtained in the year that is not subject to distribution, in the part that comes from income that has not been taxed at the general rate of corporation tax.

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One of the requirements of the Socimi is the mandatory distribution, annually, of at least 80% of the distributable accounting profits generated. With this measure, you are encouraged not to contribute your profit towards reserves and punish the potential growth of the business.

The stalking of the Socimis continues in the PGE 2022, whose condition on the part of the coalition partner, United We Can, has been the development of a Housing Law that affects large property holders.

Will be incorporated the regulation of the rental price for large holders, more than 10 homes, which by law must lower rents based on the reference index for all contracts in stressed market areas that correspond to those areas, district, neighborhood or city in which prices Means of rent have grown in the last five years more than five points above what the CPI has done. At the same time, the average amount of rent should represent more than 30% of the average income per household.

It is important to emphasize at this point that the opposition, represented by the Popular Party, has indicated that it will appeal this law to the Constitutional Court. In addition, it ensures that in the autonomous communities governed by them they will not apply the regulation of the rental price.

Does this measure affect the Socimis? According to the analysis of the Bank of Spain, in general terms not due to the high weight of the non-residential segment, and in particular of the branches. Differences are observed in the composition of the asset according to its listed market. Companies listed on regulated markets have all of their real estate assets concentrated in non-residential assets.

Now, you have to be careful because the Socimis listed on alternative markets around 29% of these assets are concentrated in housing. Before incorporating a Socimi in the portfolio, it is appropriate to know in detail what exposure it may have to residential markets in stressed areas.

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Lastly, it has been agreed a surcharge of the IBI to the empty house of up to 150%. It would be a kind of tax on unused properties that municipalities will have as their competence.


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