Rising Rental Insecurity: A Crisis in Spanish Cities
A recent report by the Urban Research Institute of Barcelona (IDRA) reveals that nine out of ten tenants in Madrid and Barcelona are trapped in temporary rental contracts at market prices, exposing them to potential speculative fluctuations and exacerbating residential insecurity. Titled "Living on Rent: Guaranteed Insecurity by Law," the report critically examines how public rental policies in Spain have contributed to heightened vulnerability and economic instability, particularly in these two metropolitan areas.
The IDRA's findings indicate that legislative reforms aimed at modifying rental contracts have consistently prioritized real estate profits over the stability and security of residents. This trend dates back to the Boyer Decree of 1985, which sought to eliminate indefinite rental contracts by removing mandatory extensions and introducing durations negotiated between landlords and tenants. The premise behind this reform was that indefinite rentals would decrease housing supply, but the report argues that, in reality, supply continued to dwindle for over two decades, from 1985 to 2007.
The IDRA highlights a worrying trend of increased temporary contracts replacing longer-term agreements, especially as the Catalan rental regulation fails to effectively limit these types of arrangements. This shift has led to a staggering sevenfold increase in temporary rentals from 2019 to 2023. According to a study from the economic policy research center EsadeEcPol, the number of temporary rentals jumped from 2 to 14 in this period, leading to significant price surges.
As a consequence of rising rental prices, the IDRA reports that approximately half of all tenants find themselves in severe relative poverty after housing costs, defined as spending less than 561 euros per consumption unit. Furthermore, the data reveals a troubling reality: 69.7% of tenants in Madrid and 64.8% in Barcelona allocate more than 30% of their income to rent and utilities, with one in three households spending over 50% of their income on housing.
This financial strain has prompted a notable number of relocations; over 60% of tenants in Madrid and 80% in Barcelona have moved in the past five years, underscoring the instability of the current housing market. Amidst this challenging landscape, the IDRA proposes a series of regulatory recommendations aimed at protecting tenants’ rights and enhancing housing stability.
One key suggestion includes implementing legislation similar to that of France and Germany, which offers automatically renewable rental contracts unless the landlord has a legitimate reason to terminate the agreement or the tenant is in serious breach of contract. The IDRA also emphasizes the need for rental prices to adjust according to actual household incomes, suggesting a comprehensive price index that would consider additional factors such as cadastral value, family income, and regional unemployment, coupled with a robust enforcement mechanism.
Established in May 2022, the IDRA was formed by a coalition of Catalan researchers focused on studying housing, public policies, political economy, urban planning, and ecological transitions, and it is supported through various European research grants.
As the report underscores, addressing the current rental crisis in Madrid and Barcelona is essential for fostering socio-economic stability and protecting the rights of tenants in Spain.
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