Investor splits Madrid flat into seven rooms, earning €26,500 yearly

The landlord who turns flats into micro-units and earns €26,500 a year

A real estate investor defends on television his right to leave a property vacant or rent it to the tenant he prefers. He boasts about converting a 96-square-meter flat with three bedrooms and one bathroom into five rooms and two bathrooms, using drywall partitions he admits are likely illegal. The result: €26,500 in annual income from renting out seven rooms. This figure is not a mistake; it is the core of the business model.

From three to five rooms: stretching a 96 m² flat

The operation is simple to describe but hard to accept. A property with three bedrooms and one bathroom becomes, through construction and light partitioning, five rooms and two bathrooms. According to the investor, these resulting spaces measure around six square meters; sixteen-square-meter units are reserved for couples. The price per room skyrockets compared to traditional whole-flat rentals, justified by the owner’s logic: if he wants to leave the home empty, he does; if he wants to rent it to the most profitable tenant, he can.

This practice is not new, but its public display is. Not long ago, a three-bedroom flat in a working-class Madrid neighborhood could be bought for €69,000, excluding taxes. Those who did so recall that between 2016 and 2017, such properties were available at that price. Today, those same flats, if they appear, are in degraded buildings, occupied illegally, or off the residential market entirely. The contrast between these realities explains why this phenomenon generates such friction.

Why rent six-square-meter rooms?

Because there is demand and no supply. That is the argument repeated by defenders of the model: if someone pays €500 or €600 for a room, it is because they cannot find anything better. The counter-argument is equally strong: eight years ago, that same money rented an entire flat in the same area. The difference is not free market dynamics, but the suffocation of residential supply.

The debate heats up when compared to tourist apartments. For some analysts, room-by-room rental is a variant of the same business: maximizing every square meter without the permits or obligations of regulated activity. For others, the blame lies not with the optimizing owner, but with the administration that fails to build. In the middle sits an uncomfortable question: how many of these micro-units meet habitability standards?

The tenant who won’t leave and the 150% rent hike

The tension is not merely theoretical. The investor’s account includes a case where a tenant refused to vacate after a 150% rent increase upon contract expiration. This scene condenses the current struggle: expiring contracts, skyrocketing rents, and legislation that owners claim offers them no protection, while tenants argue it provides them no defense.

On this ground, positions clash without nuance. Some argue that prolonged non-payment is a conscious strategy and that squatting has become a parallel business, with flats sold at bargain prices. Others respond that most tenants stay because they cannot afford the increase, not because they refuse to leave. Statistics may not be clear, but perception dominates the narrative.

Political response: inspections, expropriations, and mass construction

The list of demanded measures from various fronts is extensive. Immediate inspection of substandard housing. Closure of micro-units and demolition of drywall partitions at the owner’s expense. Public low-cost rental of vacant homes. Urgent expropriation of funds and large holders to force sales or open rentals. Ban on sales to non-EU foreigners. And in the horizon, the construction of millions of homes with no possibility of resale or third-party rental.

None of this is approved. It is a menu of circulating proposals, and its mere mention provokes two opposite reactions: those who see it as the only solution and those who read it as a declaration of war against private property. The housing discussion has become a discussion about the entire economic model.

The unsettling data point

While the debate rages in TV studios and real estate portals, the business continues. A seven-room flat generates €26,500 a year. If demand cools tomorrow, the owner will lower prices or leave the flat empty. That is, ultimately, the only rule he recognizes.