The monthly cost of renting an average property valued at 330,000 in Madrid, is 51 per cent lower than the cost of buying it. To buy a flat in Madrid you will need around 66,000 Euros to pay for the deposit (the part not covered by the mortgage, i.e. 20% of the total) and almost 33,000 Euros to pay tax, registration and legal fees (10%).
With a mortgage over 30 years, the monthly payments may be around 1,100 Euros (with the current interest rates), to which we must add 100 community fees, 30 for council tax and 80, at least, for maintenance. All together, the cost of living in a purchased property in Madrid is around 1,475 Euros every month.
On the other hand, the cost of living in a rented property of similar characteristics is around 900 Euros, so the direct saving is 575 Euros per month or 6,900 Euros per year. If we look at the money not invested (the amount that stays in the bank) and has not been used to buy a property would grow at a rate of 165 Euros per month.
Therefore, the monthly saving would be almost 740 Euros per month, around 8,880 Euros per year or even 266,400 Euros over the thirty years life span of the mortgage. In spite of the difference of prices between buying and renting, Madrid is one of the European capitals with the lowest rental rate in Europe (14%), compared to others like Berlin (70%) o Paris (55%).
Looking at the current rental market, demand is five times higher than the offer, which means that for every property available there are five people willing to occupy it. In fact, only 14% of the properties that are in Madrid are for rent (around 300,000), while there are an estimated 350,000 empty flats.
The average rental prices in central Madrid:
- Salamanca € 1,600
- Chamberí € 1,400
- Retiro € 1,300
- Moncloa € 1,200
- Centro € 1,000
By Donald Timson-Herranz, Accommodation for Students (Madrid)