Mission Statement: to assist the integration of foreign residents living in Spain
By Johanna Gardener •
Published: 04 Nov 2024 • 13:11
• 6 minutes read
Barcelona, like other major cities, faces a housing crisis as long term rentals are unavailable and unaffordable
Credit:X:@Eltzot
Barcelona s housing crisis, intensified by restrictive legislation and mounting opposition to short-term rentals like Airbnb, mirrors the struggles faced by other Spanish tourist cities and has sparked calls for government intervention to protect property investors and stabilize the market.
The housing crisis in Barcelona, as in other major tourist hotspots like Madrid and Malaga is problematic. Added to this is the proliferation of legislation which seems to be targeting landlords across the country, especially growing contempt towards Airbnb and its tourist entourage. There are current appeals to the Government to end the war on property investors and to rein in tax hikes and new reforms which could drive landlords out of the market.
Consequences of the housing crisis in Barcelona generating social problems
What is most concerning of course are the secondary and even tertiary consequences of such a housing crisis provoked by mass tourism and a hand-over of investment opportunities to foreign capital. In the most extreme of cases, the minimal supply of housing at affordable rental prices is generating a growing population of squatters like the predicament of Moroccan immigrant, Chaymae, who with her four-year-old son faces eviction from a building that she was granted by a tenant’s union that had been uninhabited for two years. The question niggles: what options does she have now?
Barcelona s residents struggle to find rental property as overrun by visitors to the city
This is not an isolated case. Nor is it a remote possibility for some who face the worrying burden of extortionate rent prices in Barcelona and a massively reduced supply. Barcelona has 1.7 million residents but every year, it is flooded by 32 million visitors from across the globe. As its global renown has grown and foreign investment has soared, locals are struggling to afford property in their own city as rent prices are inaccessible against a backdrop of stagnant wage top-ups.
But how did cities like Barcelona reach this level of crisis? In 2008, Spain experienced a significant financial crisis. This had the knock-on-effect effect of popping Spain’s property bubble and the many still paying hefty mortgages were forced to default, meaning that many couldn’t pay their mortgage leading to loss of property or afflicted credit ratings. To remedy the problem, Spain opened its doors to foreign capital and deflated housing prices fell into the hands of foreign investors. As investment peaked, the property market boomed and despite a lull around the time of the Catalan independence referendum in 2017, prices have been rising steadily for a decade in Barcelona. At the cost of its own residents!
Too much demand and too little supply in Barcelona
The problem, of course, is that despite rental prices soaring by 77% over ten years, they do not meet their match in soaring wages, which have actually plummeted between 2010 and 2022 according to municipal council data. Mark Stücklin, founder of the website Spanish Property Insight said: “The reasons for the housing crisis are very simple: Too much demand and too little supply – which is limited in Barcelona for structural reasons. You have the sea and the mountain, and there’s not much land in between.”
Rental caps and short term rental legislation could backfire in Barcelona
In order to address the housing crisis, new rental regulations were enforced to try and plug the swell of tourists and the subsequent surge in tourist rental accommodation like Airbnb. However, this has had unprecedented negative consequences for landlords. For the past six years, the minimum length of long-term rental contracts has been increasing and now stands at up to seven years. Tax deductions for landlords have been reduced and evicting tenants is more complicated than ever. Short-term holiday rentals are moving closer towards being obsolete as rent controls are firmly on the agenda. Spain introduced a new Housing Law earlier this year, which affected Catalonia: it was granted the freedom to cap rent prices of properties where they were considered unaffordable in relation to typical income. This affected around a quarter of the region including Barcelona. Small landlords with five properties or less can only raise rents per annum by a maximum of 3%.
These measures generated a heavy backlash with many regarding the legislation as unconstitutional and punitive against landlords. Francisco Iñareta of Idealista, a real estate firm said: “They are seen as the cause of the rental problem, when really they are the most important part of the solution.” He added: “Rent control and punitive measures against landlords not only fail to improve access to rental housing but also destroy the market.”
Barcelona residents show contempt for tourists as they throw water on them
Instead of penalising landlords as the Government appears to have done, residents in Barcelona are turning their disdain towards foreigners and tourists. Foreign nationals are having a significant impact on the population with a growth of 10.4% last year, while Spanish nationals grew by a mere 0.1%. In the face of this and of over tourism, exacerbated further by a recent overkill of cruise liners, protestors drenched tourists over the summer with water pistols. Rising fury has being noted and Jaume Collboni, the city’s left wing mayor, has pledged to eliminate tourist apartments including the infamous Airbnb by 2029. This on the back of 2021 legislation, where Barcelona became the first European city to ban private room rentals of 31 days or fewer. If Airbnb rentals were eliminated altogether, it could put 10,000 more properties back onto the residential market for locals.
Changes to rental policy in Barcelona means landlords find loopholes
However, are the rental caps and bans solving the problem? Clearly not. Bans without major sanctions mean loopholes and landlords are no different. When rental caps were announced last year, 2023, many landlords simply shifted their rental arrangements to “seasonal” lets to avoid being penalised by stringent long term letting regulations or by tourist rental bans. Idealista data shows that between March 2023, when the rent controls were announced, and September 2024, the number of long-term rental listings in Barcelona fell by 47%, while seasonal rentals increased by 68%. Deterred by poor incentives for renting, there is the fear that landlords will leave the market altogether – backfiring completely. When landlords and investors become disincentivised, say “adiós” to property provision for Spanish residents.
What could happen to investment in Barcelona?
Caps on rent and new limitations on tourist and short term rentals is hotly contested in Barcelona, as it is not, as yet, paying dividends. Long term rental availability is at a minimum, dropping by 65% since 2019. Investment insecurity due to the implementation of rent controls has also sparked a decline in land investment for housebuilding. Geoff McCabe of consultants Cushman Wakefield said: “The threat of rent controls practically killed all investment in the sector during 2023.” He added: “Confusion and uncertainty had a huge impact on the market. In Barcelona, with no rental caps, you would expect around €150m of investment per annum. Last year this fell to nearly zero.”
Answer to the housing crisis in cities like Barcelona: new development
What should the next move be? Now the focus is turning to development. Many believe that rental controls are only exacerbating the problem, fuelling anger amongst landlords, lowering investment interest and encouraging those in the rental sector to look for loopholes which don’t benefit residents. Over the past 30 years, there has been a huge shift in focus away from social housing and development in general, with a heightened focus on tourism and subsidising of rent payments. The housing squeeze which is being witnessed in Barcelona, as well as in other major cities, is affecting the poorer echelons as well as the moderately well-off as social housing availability is over 7% lower than the EU average.
Barcelona’s housing crisis remains a pressing issue, with many residents feeling that current policies fail to address the root problems and, in some cases, even worsen the situation. Instead of piecemeal changes, the city would benefit from a comprehensive strategy that includes stronger rent control measures, significant investments in social housing, and policies that balance housing availability for both locals and tourists. Without these reforms, the growing frustration among residents could lead to social unrest and deter the investment that has helped Barcelona thrive. For a city celebrated as one of Europe’s most vibrant urban centers, losing this momentum would be a profound setback. What actions should policymakers prioritize to ensure Barcelona remains an affordable and welcoming city for its residents?
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Written by
Johanna Gardener
Originally from Manchester, UK and with a degree in English with Modern Foreign Languages, she has been a permanent resident in Spain for the past 12 years. Many of these years, she has spent working as a secondary school teacher, as well as in journalism, editing and marketing. She currently lives in the historic centre of Malaga, where she enjoys writing, walking and animals.
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