A Portland Room Rental Pilot Puts New Oregon Sro Rules To The Test

Oregon last year rewrote the rules for one of the oldest and cheapest housing types, single-room occupancy lodgings.

As part of broader housing reform, lawmakers – with little fanfare – passed a law that gave single-room occupancy housing legal status after years of SROs being deemed zoning and permitting no-nos due to concerns about the safety and health of such lodgings.

The new measure requires cities to allow SRO units in many residential areas.

In Portland, the state’s largest city, the first step is a yearlong SRO pilot program. To tackle an affordability crisis in Oregon’s largest city, the Portland Housing Bureau launched a program that offers cash incentives to homeowners who rent spare rooms to low-income tenants.

Nationally, intensifying housing affordability concerns have prompted efforts to revive SRO housing. Cities zoned the housing type – a historically important form of semi-permanent housing – out of existence over the past 75 years.

Oregon became one of the few states to pass statewide legislation on SROs, joining Washington and Hawaii.

In Congress, Republicans and Democrats have sought to address housing affordability. Allowing single-room occupancy in areas zoned for multifamily is among the land-use policies listed in the Housing for the 21st Century Act that would qualify for federal incentives. The House passed the bill in early February, and the Senate is now considering it.

“The math showing the surplus of existing, unused housing in the US is straightforward and obvious,” Atticus LeBlanc, shared-housing platform PadSplit‘s founder and CEO, wrote on LinkedIn. “Less than 1% of existing housing square footage can yield over 7,000,000 new housing units for American workers, students, and retirees.”

Portland partnered with Atlanta-based PadSplit and Ecumenical Ministries of Oregon to assist property owners in the city’s program.

How Portland’s SRO program will work

Portland’s program will provide a one-time grant of $1,000 for the first rented room and $500 for each additional room after 30 days of successful leasing through the home-sharing providers. Participating rooms must be offered for at least 12 months, and tenants cannot be members of the owner’s family or household. Weekly rent is capped at $200, including utilities and fees, to keep rooms affordable.

The home-sharing provider will match renters with homeowners and may help with applications and ongoing tenancy support.

“For many Portlanders, home sharing is a win-win solution, helping homeowners to supplement their incomes while providing low-income tenants with affordable housing options,” Mayor Keith Wilson said in a statement.

Additionally, the city will fund capacity-building grants for community organizations that support participants. Landlord-tenant law classes for interested homeowners begin in March through Real Estate and Property Management Education.

“It’s encouraging to see city leaders acknowledge that co-living, home sharing, and room rentals can play an important role in addressing the housing crisis,” Sam Hooper, legislative counsel for nonprofit public interest law firm Institute for Justice, told The Builder’s Daily. “While pilot programs like this may help demonstrate proof of concept, government subsidies aren’t a long-term solution to what is ultimately a supply shortage driven by exclusionary zoning and overregulation.”

The Institute has been traveling the country to convince state lawmakers to introduce laws legalizing SROs. Its pitch includes a legislative template dubbed the Restoring Options in Occupancy Models Act.

Oregon’s SRO law

Under the change, Oregon’s SRO law defines a single-room occupancy development as at least four rented, lockable rooms that provide living and sleeping space but share kitchens or bathrooms. Cities inside urban growth boundaries must now permit up to six SRO units on any lot where a detached single-unit home is allowed. Cities must also allow higher-density SROs in multifamily zones consistent with existing density standards.

The law also limits how local governments can regulate SROs. This means measures such as capping localities’ parking and infrastructure requirements, which can hamstring small residential projects financially.

Local planners are revising codes and design standards. Developers are testing whether the newly allowed buildings can pencil out.

State housing officials describe the SRO shift as part of a broader push to expand access to “middle” and lower-cost housing. That means housing types ranging from duplexes to cottage clusters and co-living projects.

SRO law harmonizes with the missing middle

Lawmakers concurrently passed a broad policy overhaul to support more middle-housing. This initiative makes it easier to build small, lower-cost homes in the same zones where SROs are now allowed. The measure expands and streamlines Oregon’s middle-housing requirements and extends them to more cities.

The law directs state agencies to define what counts as “unreasonable cost or delay” for projects. Further, the measure orders new rules to curb local siting and design standards that have, to date, derailed or downsized middle housing. Those rules now permit manufactured and prefabricated units, accessory dwellings and SROs, particularly inside urban growth boundaries.

The sweeping measure also allows density bonuses and relaxed dimensional standards when projects include affordable or accessible units. The changes are expected to improve the economics of SRO-style and co-living developments on small lots.

Could an SRO pilot help with housing affordability?

Even as vacancies tick up slightly and rent growth cools, many renters still face cost burdens well above 30% of income, according to affordable housing advocates. Housing production has lagged far behind demand, leaving many residents with scant options.

The new room-rental pilot tries to unlock underused bedrooms in existing homes and transform them into lower-cost rentals. By offering modest grants and guaranteed tenant-matching, the city hopes to nudge skeptical or risk-averse homeowners to participate. If enough owners sign up, the model could add hundreds of units faster than ground-up construction, which typically takes years.

Even in a best-case scenario, home sharing would only be a partial solution to Portland’s housing shortage. However, it can act as a relatively “low-hanging-fruit” bridge, easing pressure on the rental market while larger reforms – such as middle-housing and social housing initiatives – slowly add new supply.

If combined with zoning changes and faster permitting, the model could evolve into a useful tool in the city’s broader affordability strategy.