Portugal is grappling with a housing crisis, with rents and house prices having soared in recent years. This has made it increasingly difficult for locals to rent or buy properties, particularly in the country’s capital, Lisbon.
Portugal’s housing shortage is, in part, due to low salaries, a red-hot property market, and a tourism-dependent economy. Policies encouraging wealthy foreigners to invest have also been criticised for driving up house prices and rents.
On 16th February 2023, the Portuguese government announced a package of measures aimed at tackling the housing crisis. The measures include ending the country’s controversial “Golden Visa” scheme, which offers residency rights to non-EU nationals in return for investments, and banning new licenses for short-term holiday rentals, including Airbnbs.
Curbing Golden Visa
The “Golden Visa” programme was launched in 2012 and has attracted €6.8bn in investment since then, with much of the money going into real estate. The scheme has been criticised for boosting house prices and rents, and its termination has been welcomed by housing groups.
Successful applicants to the “Golden Visa” scheme can apply for an EU passport after five years. While the scheme offers residency rights, it does not offer citizenship, as was mistakenly reported by Reuters. It is expected that the ending of the scheme will help to cool the property market, which has been running at high temperatures for several years.
Regulate rent increase
The Portuguese government also plans to introduce a mechanism to regulate rent increases, with tax incentives to landlords who convert tourism properties into houses for locals to rent. In addition, the state will rent vacant houses direct from landlords for a period of five years and put them on the rental market.
The government’s measures are worth at least €900m ($962.19m), and it is not yet clear when they will come into effect. Prime Minister Antonio Costa has said that some of the measures will be approved next month, with others to be voted on by lawmakers.
The Portuguese housing crisis has been exacerbated by the country’s tourism-dependent economy, which has encouraged investors to buy up properties for use as holiday rentals. Last year, more than 50% of workers in Portugal earned less than €1,000 per month. Meanwhile, in Lisbon alone, rents jumped 37% in 2022. This has led to growing protests and demands for action from housing groups.
Some housing groups have criticised the government’s measures as inadequate. The “Housing is a right” group has argued that the measures do not address the “system in place” in which large real estate investment funds control a significant chunk of the market. The group has also argued that, for the vast majority of people, rents will remain unaffordable, and buying a house will continue to be a dream.
Left Bloc party MP Mariana Mortagua has criticised the government’s plans, arguing that the government is giving tax breaks to landlords who have already “benefited from (housing) speculation.” Meanwhile, the Social Democrats have described the measures as an “attack” on the rights of property owners and businesses.
The Portuguese government has also faced criticism for continuing to promote policies that encourage wealthy foreigners to invest in the country. The “Digital Nomads Visa,” introduced in October 2022, allows foreigners with high monthly incomes from remote work to live and work from Portugal without paying local taxes. Some housing groups have argued that such policies are exacerbating the housing crisis by encouraging investors to buy up properties that could be used for local housing.
The Portuguese housing crisis is a complex problem that will not be easily solved. However, the government’s measures, including the ending of the “Golden Visa” scheme and the regulation of rents, represent an important step towards addressing the crisis.