Room rental prices up 49% in three years, as older renters increasingly forced to flat share

In a rental market seeing record higher and higher housing prices all the time, renting a room in a shared flat is becoming the only viable option for more and more people who cannot afford an entire apartment.

The increase in demand has caused room rental prices to increase by 49% since 2021 in Barcelona.

Housing activists are calling for more regulation to put a stop to this "way of escaping price regulation." The rental of rooms is not fully regulated in the urban rental law and does not have specific regulations.

The decree law promoted by the previous government, which was ultimately rejected by lawmakers, included a regulation that the rent prices of rooms in the flat could not exceed the reference index price for the whole flat.

Residents in neighborhoods like Gràcia complain that flats that used to be available for €700 for the entire apartment have now been converted into 'co-living' spaces, with prices as high as €900 for a room of only 10m². 

In an apartment block on Carrer Sant Agustí de Gràcia, the New Amsterdam Developers fund has teamed up with Enter Coliving to evict the neighbors and renovate the flats for rent by rooms. "It's pure speculation," one resident complains.

According to residents, the first warning sign came when the old property did not want to renew contracts in early 2023. The tenants learned at the end of that year that the block had been sold to an investment fund.

The new ownership did not offer new contracts and started to work on the flats that were empty. Six of the eleven tenants left, while the other five decided to stay, some despite being out of contract, to negotiate with the new owner who, they say, "is very difficult to contact." One of the neighbors who remains in the block has an old rent contract and cannot be forced to leave.

Almost ten months after learning of the sale, ads appeared on real estate portals with offers to rent the rooms at €930, €915, and €800, in flats that previously had been rented for just over €700 for the entire apartment.

Falling under the 'tense housing zone' regulation, the price to rent the entire flat should be around €850, but instead, individual rooms in the apartment were being offered for prices even exceeding this would-be cap. 

Regulation

Txema Escorsa, one of the tenants who has decided to stay, denounced that the ownership were engaging in "fraud" to the Catalan News Agency (ACN), as the investment fund takes advantage of the legal loophole in room rentals.

She says the new building owners do this "to triple profits and speculate on housing, evict people from their homes."

"They call it 'coliving,' not to say that you share a flat with three strangers for almost €1,000 a month," she points out.

The Tenants' Union assures that the business of room rentals will continue to grow because "there are laws that cause this type of contract to proliferate."

They warn that the law regulating this type of lease must be modified to include short-term and room rentals because otherwise "it will encourage investors to buy whole blocks, chop them up, and multiply the prices by renting room by room."

"It is an absolutely parasitic model and we have to eliminate it and the only way to do it is to go to the root and by eliminating the economic incentive," says the spokesperson for the union, Carme Arcarazo.

Room rental prices up 49% in three years

The average price of renting a room on the real estate platform Idealista is close to €600 in Barcelona, ​​with a year-on-year increase of 11%.

The increase has been sustained in recent years, as prices have soared by 49% since 2021, when the price was around €400.

The Catalan capital is the city with the most expensive rooms in all of Spain, ahead of Madrid (€550 average) where, however, prices are rising faster (15% more compared with the third quarter of 2023).

Market of extremes 

While the market for room rentals 10 or 15 years ago was "exclusively students," there has recently been a "big change."

Director of studies and spokesman for pisos.com, Ferran Font, tells ACN that access to housing for young people is becoming more and more difficult.

"Those first generations who shared a flat from the age of 25 now continue to share homes," he says. "People over the age of 40 are still sharing, because a solo rental in a city like Barcelona is within the reach of very few people."

Font says that it is increasingly "more complicated to stop sharing a flat" for older profiles. "We don't foresee these older generations getting off that wheel," he says.

In this segment of the market, there are two extremes of income: entire families who have to rent a room, people who cannot buy a home and are forced to share a flat, and expats and exchange students who have a high purchasing power.

According to data from American commercial real estate and investment firm CBRE's Flex Living Operator Survey, in developments built for 'coliving' in recent years in Barcelona, the average rate for these shared rentals is €900 per month, with supplies and cleaning included.

In total, the consultancy firm calculates that there are nearly 1,800 beds available in the city under this type of rent.

Across Spain, 30% of the occupants are master's and postgraduate students and 61% are foreigners.

"Precarious and hidden" system that escapes statistics

Experts warn that renting rooms is a "precarious and hidden" system that escapes many official statistics.

Maridalia Rodríguez, an expert in real estate law and professor in the housing department at Barcelona's Pompeu Fabra University, explains that room rentals are often done "without a contract."

"It's the cheapest way to access housing, but not the most correct," Rodríguez explains. 

Carme Trilla, president of the Metropolitan Observatory of Housing, considers that the proliferation of room rentals can be defined as "vertical slums," representing "the total failure of housing policy."

In apartments renovated to be rented out by individual rooms, renters find frequently that common spaces such as living rooms or dining rooms have been removed from the space.

Miquel, a worker in Ciutat Vella in Barcelona who was looking to rent a room near his work, visited seven flats this summer "and none had a living room," he tells ACN.

"I was very surprised by the argument they gave me, they said it was causing conflicts," he says. In all cases "it was taken for granted that meals would be eaten in your own room and that cohabitation was not possible."

The rooms were all priced at more than €700 per month, and he eventually ended up choosing to live in Badalona.