Barcelona (AFP) - A Barcelona company sparked outrage in Spain on Thursday with a plan to rent tiny pods where low income workers would live side-by-side like bees in a hive for as little as 200 euros ($232) a month

The company argues the project called Haibu -- which means beehive in Japanese -- is a solution to a shortage of affordable housing in the Mediterranean city but Barcelona city hall has refused to issue a licence for it, saying such tiny accommodation is unfit for humans.

"Fortunately piling up people is prohibited. The law does not allow this type of dwelling," Barcelona mayor Ada Colau, a former housing and anti-eviction activist, told reporters on Thursday.

Despite the lack of a licence, the company, Haibu 4.0. has already started building the first eight pods which it expects will be finished by the end of the month at an empty business premise.

Each 2.4 square metres (21.5 square feet) pod will be equipped with a bed, TV, storage space and power plugs, following the module of capsule accommodation geared for tourists which are popular in Japan.

The project will include a communal area with a kitchen with several microwaves, lounge and bathrooms, and the monthly rent would include utility bills and Wi-Fi.

The website for the project says the Haibu housing is restricted to those aged 25-45 who have a minimum salary of 450 euros a month. Five hundred people have shown interest in renting a pod, according to the company.

"We are based on the idea that a group of people who can't have access to housing can band together and move ahead," Victoria Cerdan, one of the entrepreneurs behind Haibu 4.0, told AFP.

"Obviously it is not adequate housing, no one would want it for themselves. But no one wants a monthly salary of 500 euros and unfortunately they exist. Instead of living on the street, we offer this."

The project was blasted on social media, with Inigo Errejon, a prominent lawmaker with Spain's anti-austerity Podemos party tweeting: "There are similar house in cemeteries, they are called coffins."

The project comes amid a fierce debate in Spain over soaring rents, especially in big cities like Barcelona, with the average rent for a flat soaring 28.7 percent between 2014 and 2017 to 903.4 euros, according to city hall figures.

The average monthly salary in Spain is 1,880 euros -- and less than 1,300 euros for those under the age of 30 -- which makes it difficult to rent a home.