Demand for rent is growing: analysts tell whether it is profitable to invest in renting out apartments

MK studied the modern rental market in Russia and found out that up to 25 thousand apartments are rented out in Moscow at any one time; every year, tenants' requirements for repairs and household appliances grow; most owners do not allow their real estate to be "idle".

During a crisis, prices fall, but not for long.

- There are few "professional" rentiers (they own at least three properties) on the market - 12-14%. For the rest, renting out housing is nothing more than additional income, - says the founder and CEO of the Urban award, Olga Khasanova. - Usually, housing that was originally purchased for this purpose is rented out, or, if you like, "extra" apartments (gifted or inherited).

- I never lived in the apartment I inherited from my father. In 2005, my dad bought a cheap two-room apartment on Kashirskoe Shosse, along with old furniture, and died suddenly of a stroke a month later. My mother and I consulted and decided that we would rent out this apartment. And so we still rent it out, - says 50-year-old Muscovite Vika, an employee of a transport company.

Over the course of twenty years, four families of tenants have changed. Each subsequent tenant, as it happened, lived longer. The first lasted three years, the second - five, the third - ten. The fourth tenant moved in in 2023. I wonder if he will break the record?

- In fact, several generations of tenants have passed before me. I have something to compare with, how it was and how it has become. Both the people and the approach to renting at the beginning of the 21st century and now are very different, - Vika shares.

The first tenant was a young graduate of Baumanka, Yana. It was March, the girl was preparing to pass state exams and defend her diploma. Vika and Yana met right on the street - the student was reading notes on a bench, and the future landlady sat down next to her with heavy bags from the store.

Yana said that she lived in a dormitory throughout her studies. She complained that she was tired of noisy neighbors. And finally, in her last year, she got a job, saved up some money and was ready to rent a place to live.

On the same day, the student moved to a new place of residence. She never had any conflicts with the landlady. And soon Yana got married. At first, she did not tell Vika anything about the change in marital status - she was afraid that she would raise the price. Although the payment, as Vika claims, was already below the average at that time - 10 thousand rubles a month.

- On the day when Vika came to collect the payment, Yana hid her husband's things in a far corner, and he went "for a walk" for an hour or two so as not to meet me. In general, their conspiracy was at the highest level, I did not notice the presence of a man in the house. It was only later that Yana confessed to me her cunning maneuvers when they moved to another home. And why did they decide to move? I decided to raise the payment for the first time - to 15 thousand. But the young people refused on principle, - Vika recalls.

After Yana, 40-year-old Vitalik and Vera from Lipetsk, where they had worked for a long time at a large plant, moved into the apartment. In Moscow, Vitalik headed the company's branch. The office was two bus stops away from Vika's apartment - rare luck for the capital.

The couple agreed to 20 thousand, paid for three months in advance, but demanded that a washing machine be installed and the refrigerator replaced. Yana, as was her habit in the dorm, washed things by hand, used an old "Saratov" and did not even mention new equipment.

Soon the 2008 crisis hit, and the rental market began to rock. Russians began to leave Moscow for their home regions. Students, who had previously rented housing alone or in pairs, began to "consolidate."

Thousands of new offers entered the capital market. Apartments like Vika's were rented with difficulty for 18 thousand, which the Lipetsk residents clearly hinted at. Vika agreed to lower the price for a while, but with one condition: expect an increase in payment from the New Year.

- My tenants were not poor at all - on the contrary, their income even increased during the crisis. They went on a three-week vacation to the Adriatic, which I could not even dream of at that time, - Vika recalls. - Don't get me wrong, I was not envious. Then I myself began to go to Italy, Croatia. But at that time, paying the rent did not play any role for my tenants, it was purely a matter of principle. And I needed money for my mother's treatment, which I constantly reminded them of.

The crisis ended, and the landlady began to raise the rent by two or three thousand rubles every six months. The tenants seemed not to mind, but the relationship gradually began to deteriorate. After another meeting, when Vera silently paid for the apartment, Vika panicked that she would lose reliable tenants - clean and paying the rent strictly on schedule. That's what eventually happened - however, not at all because of the landlady's greed. The Lipetsk residents initially planned to buy their own home in the capital. In 2012, the couple received the keys to an apartment in a new building, made repairs in it and moved out in early 2013.

This happened unexpectedly for Vika - the tenants simply informed her that they were leaving the apartment in a week. There were no verbal or written agreements on this matter - and the owner had no choice but to accept the situation and look for new tenants.

Renters of luxury housing sacrifice space

- Most owners of apartments where no one lives do not allow the property to remain idle, - says Irina Dobrokhotova, founder of BEST-Novostroy and bnMAP.pro. An empty apartment becomes a financial burden: even in the absence of tenants, it is necessary to pay for utilities, and the premises themselves gradually age. Therefore, renting out real estate is considered a rational solution: it not only covers current expenses, but also generates passive income.

- In recent years, we have rarely seen a sharp decline in rental prices. This usually happened during serious global crises, such as in 2008, and the Covid restrictions in 2020. At such times, rental rates fell sharply. The rest of the time, tenants and owners quickly adapted to high prices, - says Andrey Sado, managing partner of Penny Lane Realty.

Currently, the noticeable growth in demand for long-term rental is connected not only with the end of the preferential mortgage program. The increase in the Central Bank's key rate also plays a major role, the expert emphasizes. As a result, potential buyers of both secondary housing and new buildings have decided to postpone the decision to buy until the conditions for mortgage lending stabilize. And this will not happen before the key rate is reduced to at least 16%.

- To reduce rental rates on a national or city-wide scale, a large mass of affordable housing needs to be brought to the market. But in the current socio-economic reality, this is impossible, - believes Olga Khasanova. - At the same time, a local reduction in prices is quite possible - for example, if an excess of new supply is discovered in some area. In this regard, the rental market is much more flexible than the primary sales market.

Prices, of course, have grown not only in the mass segment. According to Intermark Arenda data for the first quarter of the year, the gap between the expectations of potential clients and owners of elite apartments is 60%, or 180 thousand rubles per month.

Owners of expensive housing in the capital put up offers with an average budget of 472 thousand rubles per month. However, tenants are in no hurry to pay almost half a million and rent elite apartments at an average price of 294 thousand. However, as a rule, renters have to sacrifice space.

The average requested size of housing on the high-budget rental market in the capital for the first three months was 111 square meters. Experts say that such minimalism has never been seen on the elite rental market. Previously, tenants wanted to live in an area of ​​at least 130 square meters.

- With demand heated up in the fall, prices in the offer grew faster by spring than prices of real transactions, - says the company's general director Elena Kulikova. Another factor contributing to such a noticeable difference between the cost of demand and supply is seasonality. Few family tenants look for housing in mid-spring. The hot season is summer and early September.

… And our heroine Victoria fell into depression after the couple left Lipetsk. Her apartment needed renovation, new furniture - in 2013, there were practically no people left who wanted to move into "grandma's" apartment. Unless for a small amount of money, much lower than the market value - but Vika didn't see the point in that.

- I posted ads on social networks, campaigned among friends. But no one wanted to rent my apartment except for the poor, - the woman complains.

They had to take out a loan, throw out old cabinets and sofas, re-glue the wallpaper, change the tiles, buy furniture from Ikea, install a dishwasher – and the apartment sparkled with new colors. The landlady set a monthly rent of 35 thousand rubles plus utilities – and soon new tenants were found, a married couple from Khabarovsk with an adult daughter, who soon went abroad.

- This time I decided to sign a contract and take a deposit, - says Vika. - I found a sample document on the Internet, printed it out and signed it with the tenants.

The Khabarovsk residents lived there for a good ten years. Unlike the previous tenants, they did not pay in cash, but transferred money to a bank card. On the one hand, it was convenient, but on the other, Vika stopped visiting the apartment, ceasing to monitor its condition. During the coronavirus pandemic, the Khabarovsk residents began to have problems at work, then their daughter returned from abroad. In 2023, the family went back to the Far East, leaving behind mold on the walls, faulty household appliances, and a broken sofa and chest of drawers.

Vika took the losses philosophically, even returned the deposit to the tenants. But she decided to look for new tenants with the help of a real estate agency. The attempt was successful. Now a widower from St. Petersburg lives in the apartment, who is about to become her husband.

Real estate should pay for itself

- The share of owners who have one or more free apartments but do not rent them out remains insignificant. As a rule, these are people who either do not need additional income or experience psychological barriers: for example, they are not ready to provide housing to strangers, preferring to keep it exclusively for family members. However, even such cases do not cancel the basic principle: real estate should at least cover its costs - be it a mortgage, utility bills or purchase costs, - continues Irina Dobrokhotova.

However, against the backdrop of high mortgage interest rates and rising real estate prices, buying apartments for subsequent rental has become a less attractive investment, says Fyodor Ushakov, sales director of the development company Mangazeya:

- After concluding a shared construction agreement, the client must wait 2-3 years for his house to be completed. Then at least another six months will be spent on repairs, which also require funds. It is difficult to predict what the Central Bank's key rate and rental rates will be. Therefore, if apartments are bought now, it is either for the purpose of saving money or as an asset for their children.

- There are no exact figures on the number of Moscow, and especially Russian, apartments for rent. But an analysis of offers gives grounds to believe that at any one time on the capital's market there are offers for rent of 20-25 thousand apartments, - says Kirill Kulakov, president of the Regional Association of Appraisers and professor at the Moscow State University of Civil Engineering.

At a certain level of income and savings, investing in residential real estate is really profitable. The payback period for long-term rental is more than 10 years. At the same time, real estate grows in price at least at the rate of inflation, and in some periods, such as in the last five years, has shown a doubling of value.

- For the already formed rental market, preferential mortgages have opened up new opportunities. According to the Accounts Chamber, there are almost 115 thousand borrowers in Russia who have at least two preferential mortgages. Obviously, most of this housing will be rented out for some time, - adds Kirill Kulakov. - The end of the preferential mortgage program has significantly increased rental prices. It is possible that families who bought apartments for their children will decide to rent out additional housing for some time. But overall, the volume of offers on the rental market has not increased significantly.

There is no reason to believe that rental prices will fall any time soon. There are always seasonal fluctuations, but demand is consistently high. With mortgages unavailable, the only way to acquire a full-fledged home is long-term rent. So rentiers will keep their income, says Kirill Kulakov.