Reducing barriers to Homeownership

It is time to reduce bureaucracy and remove the obstacles that stand in the way of homeownership, and this global pandemic is currently accelerating this process. The desire to own a home is growing fast within our Millennial generation. It goes further than just wanting to stop wasting money on rent. The need to own a home comes from the need to feel free, to be able to build a home of your own and to achieve real independence.


A research study conducted by BBVA finds that 65,1% of Millennials are still living with their parents. Meanwhile the “CIS” (Sociology Investigation Center) barometer shows that 81,8% of Spaniards would rather buy a property than rent (12,9%). This shows the frustrating situation in which this generation finds itself: wanting to buy but not being able to buy. Behind this are the high costs of acquiring a property and the difficult and complicated requirements needed to access a mortgage, up to now the main way of financing a home.


Specifically, in Spain you need to have a total amount of savings that equals at least 30% of the total property price (20% down payment + 10% taxes and other related costs). This means you need around 90.000€ in savings in order to buy a 300.000€ property. We also have to take in consideration that you need to have at least an income of 2.000€ per month, a stable and secure job, a great credit history, bank sureties and guarantees, all of your personal documentation up to date, personal working history, recent income tax declarations, ownership deeds, bank statements for the past months, latest debt payments, and if it’s the case, the rental contract and latest payments statements.


There are numerous requirements and impediments to buying a property. This is precisely what generates the frustration many millennials feel related to housing. Because even if millennials represent the highest educated generation, all these mentioned impediments make homeownership complicated and inaccessible. This immediate and real problem is a consequence of multiple factors and a complex market evolution. Thankfully various solutions are arising to satisfy this demand.


In the past years we have seen how other industries are undergoing an “uberization” process to offer society what it demands. In such a rapidly changing world we need to quickly adapt to surf the wave. We must be flexible and agile, and consequently any company must acquire these competencies and skills. The Real Estate market has been very passive for decades and it’s about to undergo a total disruption as it adapts to the new environment. The arrival of COVID19 has definitely accelerated this process.


One of the most important things of this tech era is that it is removing barriers for mid and lower income individuals to acquire goods and services. Different possibilities, such as purchasing through subscriptions or flexible buying have sprung up. In the Real Estate market, a new alternative to the traditional “buying or renting” model has appeared: #SmartHousing. This model is an interesting mix between a rent-to-buy model and a leasing, with the advantage of having access to other additional services. You can use your rent money, which usually is a substantial part of your income, to comfortably buy a home.


Millennials are the generation that, together with the “Z” generation, prefer everything in “one-click”. For these generations the traditional banking procedures and requirements cause reluctance and stress. The accessibility to Homeownership is in great need to be adapted to these new generations.


To conclude, we live in an extremely demanding and changing society, and products and new alternatives in the market must adapt to this reality. We need to be more flexible and agile. Our duty is to reduce bureaucracy, simplify procedures, and go in the direction of user-friendliness, “one-click” processes, and accessibility in real time. Let’s strive towards reducing barriers and simplifying the market. ¿Who would have told us that COVID19 would be our CTO?


José Manuel Cartes

CEO of LIBEEN Smart Housing