ESTATE AGENCIES RENT SURVEYS

GUIDELINES FOR SURVEYORS

2013 VERSION

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CONTENTS

Page

1. PURPOSE ......................................................................................................................... 2

2. METHODOLOGY .............................................................................................................. 3

3. ROLE OF PARTICIPATING INSTITUTIONS ......................................................................... 4

4. PREPARATION FOR THE SURVEY ..................................................................................... 5

5. THE SURVEY INTERVIEWS ................................................................................................ 6

6. THE QUESTIONNAIRE ...................................................................................................... 7

7. REWARD FOR THE ESTATE AGENT .................................................................................. 9

8. AFTER THE INTERVIEW .................................................................................................. 10

9. REPORTS ........................................................................................................................ 10

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1. PURPOSE The salaries of over 40 000 international civil servants in the European Union1 and the Co-ordinated Organisations2 (CO) are based on a system of parities between the different duty stations, i.e. equality of purchasing power for staff regardless of their location with that of Brussels, the base city. Translating the Brussels salary into a local currency using the normal exchange rate or Euro conversion rate would not guarantee that no unfair gains or losses would occur. Therefore, a coefficient is used to ensure equality of purchasing power of salaries in the different duty stations. These coefficients are based on regular surveys of the prices of a fixed basket of goods and services carried out in each capital city and other places of employment of the various organisations. Housing costs are treated differently from other prices for two reasons. Firstly, they are the largest single item of expenditure (typically 15–20% of total spending). Secondly, housing is different from any other type of good or service because of its uniqueness. No two dwellings are alike, especially when one takes account of all the secondary attributes which affect the price, such as the quality of the district, access to shops, transport, schools and so on. This makes the comparison of housing very difficult. That is why the work of rent surveyors is very important and a highest level of thoroughness is needed. The correction coefficients are changed every year, on the basis of the latest prices (outside the Euro zone also on the basis of exchange rates). The new data have to be approved by the different budgetary authorities on the basis of a formal proposal by the administrations of the different organisations. These figures are also scrutinised very carefully by Member States, who are always vigilant to ensure that their taxpayers are not being asked to contribute more than is necessary. At the same time the Commission administration (DG HR) is obliged to present all proposals initially to the staff, through the staff associations. These groups also examine the figures very carefully; in their case, the purpose is to ensure that the staff is receiving the correct amount to which they are entitled. It is therefore necessary to ensure that the results stand up to such detailed scrutiny - the consequences of error can be serious, including legal process in the different Courts of Appeal.

1 European Commission, European Parliament, European Council, Court of Justice, Court of

Auditors, Committee of Regions, Economic and Social Committee, European Agencies.

2 NATO, OECD, European Space Agency, Council of Europe, European Centre for Medium-range

Weather Forecast, European Organisation for the Exploitation of Meteorological Satellites.

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2. METHODOLOGY The aim of the rent surveys is to calculate the differences in current rental levels for the same types of property between Brussels and each of the other places where the survey is done. With this information, and that derived from similar surveys over the past five years, estimates are made both of the rents which tenants are actually paying and the ratios between Brussels and the other places. These rent ratios (“parities”) are then combined with parities for all other types of expenditure, weighted according to the relative amounts spent on each type, to result in an overall parity or relative cost of living which is the basis of the correction coefficient. As mentioned before, Brussels is the point of reference in the whole comparison exercise. The aim of rent surveys is to compare the average rent market for some specific kinds of good quality dwellings in some pre-selected areas of Brussels with similar dwellings in pre-selected areas in other EU capitals and duty stations. Selection criteria for the areas to be surveyed are of great importance. Dwellings and districts cannot be compared by physical characteristics alone as the duty stations vary enormously in both size and desirability. For example “close to the city centre” is not a very meaningful concept when comparing small towns like Varese or Culham and large cities such as Paris or Rome to Brussels. A "utility approach" i.e. comparing the price of obtaining shelter of a good standard is a more practical approach for the comparison of duty stations. For the purpose of comparability the rent survey should cover those districts, where professionals like doctors, professors, lawyers and managers, who pay the rents from their own pocket actually live; and, where often the international schools (e.g. British, American, French, German, European schools) are located. In such a case, closeness to the centre is not necessarily the most important factor. However the selected districts should be situated within what is considered for the given town to be a reasonable distance from the centre and within an easy commute by car or public transport. The survey is carried out among estate agents, because the aim is to measure typical rental levels (“prices”) for similar types of dwellings. If we would carry out the survey among staff themselves, we would lose the element of objectivity, since individual officials may choose to live wherever they want and that choice partly depends on relative rent levels, which is what we are trying to measure in the first place. The current method on gathering rental data dates since the adoption of the present methodology for the calculation of CC in the early 1990’s. Though, in 2010 the A64WG started examining and assessing the relevance of alternative ways of gathering rent data. The discussions led to a) a consensus among members of the working group that estate agency rent surveys were generally the best way to ensure a high response level, comparability and quality, and b) to envisage an alternative solution to the rationalisation of resources used to conduct the current surveys. Then, with regard to the latter course of action, in 2011 national delegates expressed their support to a concrete proposal aiming to reduce the frequency of the fieldwork participation of Eurostat and the International Service for

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Remunerations and Pensions (ISRP, formerly the IOS) in the surveys from every year to one every two years, where possible. Hence, in the intermediate years, estate agencies are to be interviewed solely by the NSI representatives. With this approach, implemented in 2012, the NSI ensure the appropriate characteristics of the rental market in each country, i.e. the aspect of representativity; while, Eurostat/ISRP participation on the second year will ensure the comparability aspect between each survey location with Brussels.

3. ROLE OF PARTICIPATING INSTITUTIONS Eurostat/ISRP As in the case of all other basic parities, the EU Staff Regulations give Eurostat the responsibility for collecting and processing the data on rents. Eurostat delegates most of the data collection work and some of the data processing/analysing work to the National Statistical Institutes (NSI). In the case of rent surveys, because of the importance of rent parity mentioned earlier, the involvement of Eurostat in the data collection is larger than usual. The responsibility of rent surveys is shared between Eurostat, the NSIs and the ISRP on behalf of the Co-ordinated Organisations which have similar rules regarding correction coefficients. Hence, the ISRP and Eurostat have a common interest in sharing the survey work. In those locations where the fieldwork is jointly done with the NSI, Eurostat/ISRP rent surveyors have to submit final rent data and a report at the end of each survey. At the end both Eurostat and the ISRP should have a complete set of reports for each place surveyed. Early in the year, the list of survey locations established by Eurostat/ISRP where estate agencies are to be interviewed solely by the NSI representatives will be presented for agreement to the relevant NSI. National Statistical Institutes Great importance is given to the active participation of the national or local statistical institutes. Their involvement in the work carries considerable weight in defending final results. The role of the NSI is:

selecting the estate agencies,

arranging appointments,

selecting, in agreement with Eurostat and ISRP, the most appropriate districts for comparison,

participating in the interviews; or, where appropriate, running the interviews of the survey alone if the NSI is responsible for the fieldwork a given year,

verifying the results,

when and where appropriate, producing and submitting to Eurostat/ISRP final rent data and a report at the end of each survey for which a NSI would be responsible of the fieldwork (see section 9 - Reports).

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The NSI local knowledge, not to mention the fact of using their common language, are of great importance in these surveys. They also provide valuable continuity of experience. Therefore, when the fieldwork is jointly done between Eurostat/ISRP and the NSI, it is most important to discuss the practical aspects of the survey, especially the selection of districts and agencies to be covered, and to reach an agreement on these issues with the NSI representative before starting the survey.

4. PREPARATION FOR THE SURVEY Preparatory contacts between Eurostat/ISRP and NSI will have been made early in the year. A list of estate agencies to visit and a timetable of appointments should have been finalised before the beginning of the survey. Lists of districts to be surveyed have already been agreed for all places. Before removing or adding agencies to the appointment list, districts mentioned in last year’s survey should be checked and agreed between Eurostat/ISRP and the NSI representative. NSI surveyor:

The NSI should receive, before the survey, a copy of last year’s report with relevant comments concerning agencies to visit, particular persons to interview at the agency, detailed addresses, timetable and any other information pertinent for setting up appointments.

The list of agencies: The NSI representative should draw a list of agencies prior to the survey. There

is always a tendency for the number of agencies to drop, as firms go out of business or move, and it is important to keep replacing these. The surveyors should aim to visit 10 or more agencies in the larger cities. In the smaller places it may be possible to cover the market with a smaller number, but 6 should be regarded as minimum. The list should contain a greater number of agencies than the target (as inevitably there will be one or two that you will not succeed in visiting); however, please bear in mind that an adequate number of them should also be able to provide data on houses and that all agencies should cover the correct districts and cater for the same population we are trying to target.

A number has been allocated to each agency. Please write in both the name of

the agency and the number at the top of each questionnaire, to avoid any error. If you have substituted a new agency for an old one, please do not use the old number; create a new number instead.

Dossier:

Before starting the survey make sure that you have familiarised yourself thoroughly with the questionnaire, that you have a pocket calculator with you and that you have studied and brought with you a complete dossier for the city. The dossier should include:

the timetable for appointments;

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a street map - which would be of great help if it has been marked in previous surveys to show the locations of the agencies as well as closest public transport stops;

the report of last year’s survey (particularly last year’s figures from the individual agencies);

enough copies of the questionnaire;

enough copies of the brochure containing previous year’s summary results for all countries;

business cards, if available, to exchange with the estate agents;

these guidelines. When the fieldwork is jointly done between Eurostat/ISRP and the NSI, a preliminary meeting between Eurostat/ISRP and NSI representatives should take place before beginning the survey. The purpose of this meeting is to confirm the timetable of appointments, discuss transport arrangements (if any), and discuss any other relevant matters. It will be helpful at this stage to have a discussion of the general trends in the local housing market during the past year, and perhaps also to look over the results obtained in last year’s survey. The NSI representative may be able to indicate any special factors which have influenced rent movements in the past year, or which may soon do so.

5. THE SURVEY INTERVIEWS • Try to ensure that the interview is with a principal of the firm - someone who is

likely to have a deep personal knowledge of the local housing market. The report of last year’s survey should give the name of the person interviewed, and for consistency it will usually be preferable to see the same person.

• You must have a personal interview; a postal return to the questionnaire should be avoided.

• It will usually be better for the NSI representative to open the interview. His official status can be helpful and, of course, he will always be able to speak in the interviewee’s language.

• Start off, if possible, by passing your business card to the agent, requesting one of his/hers if it is not spontaneously offered to you in return. This is an essential part of the survey file, as it will provide the name, address, phone and fax numbers of the person providing the data for the agency surveyed.

• The main purpose of the interview is, of course, to get the data requested in the questionnaire. But a general discussion about the state of the local housing market (how it has changed in the past year and what changes might be expected in the coming year etc.) could help to "break the ice". This background information may be of considerable help in interpreting the figures and explaining the reasons for any odd results. You will therefore need to note these points down during the interview.

• It should be made clear that we are interested only in the rental market, and not in capital (purchase) values.

• Give a blank copy of the questionnaire to the agent at the first appropriate moment. Tell him that you do not want him to fill it in, but simply to read it so that he can answer the questions during the interview. It will help to focus the discussion and make the questionnaire fully understandable if you read through the text aloud to the agent.

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• You should also gather information on availability, supply and demand of different types of dwellings. This information is important for taking decisions about the types of dwellings to be used in the calculation of rent parities.

• If you are falling behind in your schedule and are likely to be late for your next appointment, make sure that you telephone ahead to apologise and re-schedule your appointment.

IMPORTANT NOTE: You should have in front of you throughout the interview the results of last year’s interview with this agent, but do not mention the figures given last year. You are trying to obtain a fresh and unbiased estimate of this year’s data, and to refer to last year’s results could influence the figures. However, at the end of the interview, you may refer to last year’s results if there seems to be a discrepancy. For example, the agent may begin by saying that there has been little change in rents during the past year, but may then give you figures, which imply a 10% increase on the figures given last year. In this type of circumstance, you should tell the agent, and see if there is an explanation.

Remember that it is nearly impossible to check the data some weeks later, being far away. Thus, as far as possible, try to discuss all the “strange” data with the agent during the interview.

6. THE QUESTIONNAIRE The following notes relate to the details on the questionnaire itself, and you will need a copy of the form in front of you while you are reading these notes (an example of the questionnaire is annexed to these guidelines).

Agency: Note the agency name and number and the agent's name in the right top corner of the questionnaire. Monthly rent: We are looking for the actual rent payable for various types of dwellings, whether payable partly in cash or not. Thus, if the asking rent is usually negotiable downwards, it is the actual rent that we want. Conversely, if the asking rent has to be supplemented by separate cash payment (as happens in some places), in such cases it is the total rent that we want. The figure should exclude deposits, key money and similar one-off payments. It is extremely important to get real rents. You should report any special practices which prevail in the city. It is very important to make clear that our staff pay their rents themselves, unlike senior staff of embassies or large corporations. It is clearly mentioned in the questionnaire, under "general characteristics", that accommodation rented by the employer must be excluded. Unfurnished: In some places it may be impossible to find unfurnished properties in any significant number. In these cases, ask for the rents of furnished dwellings, but ask also what the normal difference would be for an unfurnished equivalent. (The provision of “furniture” is often very basic, and done for legal reasons, such as making it easier to end a tenancy; in such cases the effect on rent is likely to be negligible). Charges: We are seeking the “pure” rent of the accommodation only. Charges made for general services (concierge, common cleaning, central heating, lift, etc.) should, therefore, be excluded. Also exclude charges for gas, electricity, water etc.

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In those cases where these charges are normally included in the rent, please ask the agent to make an estimate of these costs and note it in the report. Location: This is probably the most important determinant of rent, so the surveyors have to pay very close attention to it. We all have selected and jointly agreed on the districts and these are listed in the questionnaire. Nevertheless, the NSI representative should check that the districts are still relevant, as sometimes there are factors, which cause one district to decline in popularity while another gains. In any event, we should bear in mind that our task is not necessarily to survey those areas where expatriates live - we are looking for good quality residential areas, where professionals (like doctors, professors, lawyers, and managers, who pay the rents from their own pocket), actually live. The quality should be good to very good, but not luxurious. Avoid referring to areas lived in by diplomats, since this phrase may suggest ambassadorial residences! Similarly, avoid properties where rent is paid directly by employers. Characteristics of accommodation: The specifications on the questionnaire are for general guidance; they need not be interpreted over-rigorously. Living area should include cellars and attics if habitable. Likewise, availability of parking space should be included as part of the overall rent cost of a dwelling in those cases when it is an inherent element of the property, particularly for houses: however, its surface should be excluded from the living space. Any common practice identified in a given location which is different than those specified on the questionnaire should be noted in the report. Accommodation types: There are a total of 5 separate types of dwelling:

Detached house

Non-detached house (i.e. terraced or semi-detached)

3-bedroom flat

2-bedroom flat

1-bedroom flat

Within each of these types, there are different sizes for total living space, depending on the styles commonly found in different places. The questionnaires are pre-printed with the sizes, which have already been established as being most commonly found in each place. However, in the event that the typical surface size for a given type of accommodation appears to be changing over time, the surveyor may then start collecting rent data for a new surface size class in addition to data for the previously established one, provided that such change has been confirmed by all estate agents. In such case, the new surface size class to be surveyed should match one the alternative sizes already existing and regularly surveyed in Brussels (all surface sizes surveyed are presented in the copy of Brussels’ questionnaire annexed at the end of this document). On the basis of the information provided, Eurostat and the ISRP will decide when and if the new surface size class should be incorporated into the rent parity calculation, in replacement of the previously established one. Rents: The purpose of rent survey is to get a reliable estimate of the rent level. Simply asking for possible minimum and maximum rents is however not ideal. For

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each of the specified dwelling types on the questionnaire ask the agent at the beginning for a range of rentals within which most recent contracts have fallen. The agent will often have no difficulty in estimating the lower value of a range, but the upper value can be open-ended because there is hardly any limit to what can be charged for a dwelling of great luxury. However, we are not looking for the luxury end of the market, and we should be asking for a range within which the majority of contracts fall. Thus, try to get either a “typical” (or “most frequent”) rent or a relatively narrow range for a given type of dwelling.

If the range is big because of the fact that the agency covers a heterogeneous group of districts with very different rent levels, then take separate estimates of the relatively homogeneous groups of districts. In such case, the surveyor should attach to the rent data file the detailed data provided and the calculations performed to obtain the average rent for that given agency.

Compare the rents given with those of last year (before the interview you can write on your questionnaire last year’s results).

It may happen that you will be given rents per m2 instead of total rent (e.g. in Germany). In such cases, multiply the "typical rent" per m2 by the mid-point of the size-range to obtain the total rent and ask the estate agent if the resulting value reflects correctly the average total rent paid for that specific type of dwelling. If the rent per m2 is given as a range, e.g. 24–26 EURO/m2 for a 3-bedroom flat (110–

130 m2), then the noted range of rent should be 2880–3120 EURO (24 120 to 26 120).

In the UK and Ireland, it is not common for the total area to be known, either by the tenant or the agent. However, the size range quoted on the questionnaire should be consistent with the type of dwelling and the number of rooms. In some cities the same amount of rooms may show large differences in m2 size (e.g. London); hence, please discuss that issue with estate agents so that rents collected reflect in the best way possible the surface size to be surveyed and make sure that you note such anomalies in the report. Districts covered by the estate agency: Note to which districts the rents given by the agent refer, distinguishing between flats and houses (they can be in different districts).

7. REWARD FOR THE ESTATE AGENT We are unable to offer any cash incentive to the agencies co-operating in these surveys, and we are entirely dependent on their goodwill. We can, however, offer them something in return for their co-operation, and that is information. At the end of the interview, you should offer the agent a copy of the brochure containing results obtained for each survey city last year. This type of data is not easy to find, and will often be expensive. Many agents will therefore value it.

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8. AFTER THE INTERVIEW After each interview, or at the latest after a group of interviews, go through your figures to make sure that there is no contradiction between the figures noted by the surveyors. Otherwise, the final figure cannot be duly verified. Although normally you will report the rents quoted to you by the agents, it may occasionally happen that you feel that a particular figure is incorrect, perhaps because it relates to a district outside the ones you are considering, or because the type of accommodation is outside the normal quality range. In such circumstances, try to contact the agent again to check doubtful data. If the figure is really questionable please mention it in your report, so that next year’s surveyor can take note of it. Please note that the data obtained from one or other agency may well be out of line with the others. If you think you know why this is so, make a note of it. But even if you do not know, do not be tempted to adjust the data or even to withhold it. Decisions in this matter will be taken during the analysis phase in agreement between Eurostat/ISRP and the NSI.

9. REPORTS The responsible surveyor (either from Eurostat/ISRP when the survey is carried out jointly with the NSI; or, from NSI, when estate agencies are interviewed solely by NSI representatives) should file all completed questionnaires (one for each agency) and write a survey report as soon as possible (within 2 weeks) to be shared by both organisations. The report should cover anything of relevance, but concentrating particularly on information which is relevant to the results, or which may help to explain any oddities. Information about houses and districts where houses are located, about availability, supply and demand of different dwelling types are particularly interesting. Background information, which may have a bearing on next year’s results, should also be recorded. The reports are completely confidential, and can contain personal information such as the poor performance of a particular agent (the firm can be removed from next year’s list). It will be helpful for next year’s survey if your report can include a map of the city, marked with the locations of the agencies and nearest public transport stops. You could also mark out the districts for which rents have been quoted, but this is not necessary provided that the names of the districts are clearly shown in your report.

THANK YOU VERY MUCH FOR YOUR ASSISTANCE IN THESE SURVEYS. February 2013 Eurostat, Luxembourg ISRP, Paris

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BUDAPEST

Agency: ________________________ # _____

Agent name: _____________________________

RENTS SURVEY 2013

For the various types of accommodation described below, you are asked to provide the monthly rent.

GENERAL CHARACTERISTICS OF THE ACCOMMODATION

Property: Unfurnished.

Location: Residential areas of good quality where professional people live (e.g. doctors, managers, lawyers).

Year of construction: Recently built or modernised (e.g. within last 10 years).

Situation / Outlook: Middle floor. In good, well-lit position.

Finish: Floor, walls, sanitary fittings, doors, etc. of good quality.

Living area: Total internal habitable area; exclude garage and terrace.

Price data requested: Monthly rent excluding charges (duration of the contract of at least one year). Rent paid by tenant (rent paid by employer must be excluded).

DISTRICTS COVERED Districts I, II, III, V, XII

KIND OF ACCOMMODATION Price Range / Typical Rent

I. 3 bedroom flat 110-130 m²

3 bedrooms, living room, kitchen, 1 or 2 bathrooms

II. 2 bedroom flat 60-80 m²

2 bedrooms, living room, kitchen, 1 bathroom

III. 1 bedroom flat 40-60 m²

1 bedroom, living room, kitchen, 1 bathroom

IV. Non-detached house 140-160 m²

(e.g. terraced or semi-detached) 3 bedrooms, living room, kitchen, 1 or 2 bathrooms

V. Detached house 190-220 m²

4 bedrooms, living room, kitchen, 1 or 2 bathrooms

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BRUSSELS

Agency: ________________________ # _____

Agent name: _____________________________

RENTS SURVEY 2013

For the various types of accommodation described below, you are asked to provide the monthly rent.

GENERAL CHARACTERISTICS OF THE ACCOMMODATION

Property: Unfurnished.

Location: Residential areas of good quality where professional people live (e.g. doctors, managers, lawyers).

Year of construction: Recently built or modernised (e.g. within last 10 years).

Situation / Outlook: Middle floor. In good, well-lit position.

Finish: Floor, walls, sanitary fittings, doors, etc. of good quality.

Living area: Total internal habitable area; exclude garage and terrace.

Price data requested: Monthly rent excluding charges (duration of the contract of at least one year). Rent paid by tenant (rent paid by employer must be excluded).

DISTRICTS COVERED Bruxelles 1000, Schaerbeek, Etterbeek, Ixelles, Auderghem, Uccle,

Woluwe-Saint-Pierre, Woluwe-Saint-Lambert, Watermael-Boitsfort

KIND OF ACCOMMODATION Price Range / Typical Rent

I. 3 bedroom flat 80-100 m² 110-130 m² 140-160 m² 3 bedrooms, living room, kitchen, 1 or 2 bathrooms

II. 2 bedroom flat 60-80 m² 80-100 m² 2 bedrooms, living room, kitchen, 1 bathroom

III. 1 bedroom flat 40-60 m² 60-80 m² 1 bedroom, living room, kitchen, 1 bathroom

IV. Non-detached house 80-100 m² 110-130 m² 140-160 m² (e.g. terraced or semi-detached)

3 bedrooms, living room, kitchen, 1 or 2 bathrooms

V. Detached house 110-140 m² 150-180 m² 190-220 m² 4 bedrooms, living room, kitchen, 1 or 2 bathrooms