New Portuguese Law Will Force Owners of Vacant Homes to Get Tenants

A three-bedroom colonial single-family home in Valenca, Portugal. (Courtesy of Infinite Solutions real estate, Portugal)

The Portuguese government announced new measures last week to handle the country’s housing crisis, including ending the so-called “golden visa” program, and would put a ban on short-term holiday rental licenses, like for Airbnbs.

Lisbon wants to force owners of vacant properties across Portugal to open them up to long-term renters because of soaring home and rental prices.

Portuguese low wages, high 8.3 percent inflation, a tight property market perpetuated by real estate policies encouraging wealthy foreigners over natives, along with a tourism-dependent economy, have caused local housing advocates to protest the inability of Portuguese citizens to rent or buy.

However, the government housing plan, which consists of a package of measures approved by the cabinet of Prime Minister Antonio Costa, has been attacked by property owners as a violation of the constitution.

Costa’s “More Housing” plan is a desperate bid to increase housing supply in a tight real estate market, which has become unaffordable to many local residents.

The new rules would include limits on rent increases, initiatives to speed up new building permits, a ban on new short-term rentals, and the cancelation of the controversial “golden visa” program for foreigners.

New licenses for short-term rentals for tourism accommodations, such as for Airbnbs, will be prohibited outside of less populated rural areas.

The special “golden visa” program offers European Union passports to non-EU nationals in return for investments in Portugal, and which has been criticized by many for exacerbating the housing crisis.

The scheme attracted $7.25 billion in foreign investment since it was passed in 2012, with the bulk of the money going into local real estate.

Opposition Parties Oppose Government’s Plan

Meanwhile, many Portuguese homeowners and investors insist that the government’s move to force citizens to rent out their vacant homes violates constitutional private property rights.

It is not known how the authorities are going to enforce the orders, say critics.

“It’s clearly unconstitutional,” Luis Menezes Leitao, president of the Lisbon Property Owners’ Association, told Bloomberg.

The Portuguese Association of Real Estate Developers and Investors also issued a statement, describing the rental plan as “an attack” on private property.

Mariana Mortagua, from the opposition Left Bloc party in parliament, called the government' s proposals flawed and that were being given tax breaks to landlords who had already benefited from real estate speculation, Reuters reported.

The Social Democrats also called the housing legislation an “attack” on the constitution.

Housing Minister Says That New Laws Will Not Violate Private Property Rights

Housing Minister Marina Goncalves defended the government’s policy as a way to ease the lack of housing that has pushed property and rental prices to record highs, especially in the capital of Lisbon, where the shortage is critical.

Last year, rental costs in Lisbon alone, jumped 37 percent.

Goncalves told Portuguese television station SIC in an interview that holiday homes will not be targeted and that about 730,000 homes in Portugal are currently empty.

The housing minister said in response to critics that the right to property “is never called into question,” adding that “an empty house … must be used for the purpose it was created for.”

Although the policy still needs to be fine-tuned, Goncalves said that the new laws are perfectly legal and do not violate the constitution.

“The state does not enter and occupy people’s homes and then say, ‘Now I’m here.’ We have steps that will be taken,” she explained.

Housing advocates said that measures would mean little if the government continues to promote other unpopular policies that attract wealthy foreigners to Portugal, such as the “Digital Nomads Visa,” which was passed last October. That law gave foreigners with high monthly incomes permission to live and work from Portugal remotely without paying local taxes.

Ruling Socialist Party to Pass Controversial Housing Law Next Month

Meanwhile, Costa stated that the country’s housing crisis was affecting families nationwide, not just low-income households, and that his government had to take action.

Portugal is one of the the poorest countries in Western Europe, with some of the lowest average wages in the region. More than 50 percent of workers reportedly earned less than €1,000 per month last year.

About 78 percent of Portuguese are estimated to be homeowners, while the rest were renters, according to the latest data from Eurostat.

It is not known when the measures, worth at least $962.19 million, will come into effect, but a mechanism will be introduced to regulate rent increases, said Costa.

The prime minister added that the government will offer tax incentives to landlords who convert tourism properties into houses for locals to rent. Costa said his government would also rent vacant houses directly from landlords for a period of five years and put them on the rental market.

Most of the new housing proposals will be up for public discussion until Mar. 16, when the cabinet will vote on a final approval.

The prime minister said that the remaining part of the package will be voted on by lawmakers in parliament, where the ruling Socialist Party holds a majority.

Reuters contributed to this report.