Key Takeaways
- Portugal has introduced new laws to tackle its housing crisis, scrapping the Golden visa program and limiting short-term holiday rentals in urban areas.
- The country previously attracted investors and digital nomads through these visas, fostering international interest and investment.
- The influx of tourists led to property conversions and rent hikes, causing housing shortages and escalating rents, especially in Lisbon.
- Measures include rent regulation, tax incentives for landlords converting tourism properties, and renting properties from landlords for public housing initiatives.
Policy Changes to Address Crisis
Lisbon, Portugal–The government of Portugal announced the passing of a new set of laws aimed at addressing a severe housing crisis faced by its local population in a press conference on February 16.
According to a Reuters report, two of the primary reformations include scrapping its Golden visa program and a law to curb the registration of new short-term holiday rentals in urban areas of the country.
Impact on Housing and Tourism
Over the last few years, the southern European country, one of the poorest in Europe, has adopted several aggressive strategies to attract investors and, more recently, digital nomads to its shores.
The two visas had achieved their goal of attracting foreign investment and the international community, making Portugal a leading destination worldwide.
- The golden visa allowed wealthy individuals to buy real estate in the country and convert it into commercial properties (e.g., Airbnb and resorts).
- Portugal’s digital nomad visa made it popular among long-term tourists. Madeira, Ericeira, Lagos, Portimão, and Porto are currently considered top destinations for digital nomads worldwide.
Government Response to Housing Crisis
Although things seem to look up in the apparent (development of city infrastructure and a strong presence of a wealthy international population), the Portuguese lower and middle classes are battling high rents and housing shortages.
Over the last few years, the influx of higher-salaried tourists has lured landlords to convert their properties (from residential to short-term rentals) or increase rents.
Per a report by Bloomberg, short-term rentals account for more than 60% of listed properties in the downtown area of Lisbon, with average housing rents increasing by 36% in the last year alone.
PM’s Intervention Plans
In the report, Portugal’s PM, Antonio Costa, said that the state was going to intervene to solve the public housing crisis, including introducing measures to regulate rent increases, offering tax incentives to landlords who covert tourism properties into rental homes, and also renting properties from landlords for five years and putting them on the rental market.
It isn’t clear when the measures are to be put into effect. The PM added that some would be approved next month, while lawmakers will vote on others soon.
What We Think
Portugal’s decision to address its housing crisis through legislative changes is commendable. By eliminating programs that contributed to the problem and introducing measures to support affordable housing, the government shows a commitment to its citizens’ well-being.
However, the effectiveness of these measures will depend on swift implementation and enforcement. Striking a balance between attracting international investment and safeguarding the local population’s housing needs remains crucial for sustainable development.
