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When we talk about things that can have a big impact on the real estate market, politics is an important one. A friendly political climate for real estate can make a market grow while an unfriendly one can weaken a market. But what kinds of things affect a market favorably or unfavorably? Let’s see some examples:

Tenant-Friendly Versus Landlord-Friendly Policies

This contention is probably the most common issue. There are some countries and states that tend to make laws that protect the tenant more than the landlord and there are other areas that do the opposite. Tenant-friendly laws are usually less advantageous for real estate investment and leave investors less protected. These policies include rent price controls, more circumspect screening, obligations for long-term contracts and difficulties in the eviction process.

On the opposite side, landlord-friendly policies include more protection for landlords in case of default (with an easier eviction process) and free market prices for rent. I see how laws and policies more friendly to tenants tend to scare investors who might then invest in other areas. For example, in the U.S., California tends to be more tenant-friendly while Florida’s laws are more protective of the landlord. The result has been a significant increase in investment in Florida with many investors avoiding California.

Ultimately, landlord-friendly policies are at ends with tenant-friendly policies. That’s because any of these policies have the goal to place one as having an advantage on the opposite side.

Building Policies

If it is easy to get a license, how long will it take to have it? And if you already have a license, what are the restrictions? Time is money and investors know that. There are countries or cities that tend to make things easy to make new projects, and this will always attract new investors. But if the process to get a license is complicated and long, this can scare new investors.