Amid soaring prices and a reduction in the number of properties on the market, Lisbon temporarily suspended authorizations for new vacation rental units, such as Airbnb and Booking, in 14 of the city’s 24 parishes.
The decision was approved by the Municipal Assembly, which has a left-wing majority among deputies, and did not have the support of the center-right mayor, Carlos Moedas (PSD). The mayor even classified the measure as “very negative” for tourism and entrepreneurship in the city.
In Portugal, municipalities may require owners to obtain special licenses for the operation of short-term rental units: an activity called local accommodation in the country. It is precisely this document – which is required at the time the properties are registered on the operating platforms – that Lisbon no longer grants.
The suspension came into effect in mid-April and is valid for six months, with the possibility of renewal for the same period. The limitation applies in regions where the proportion of units in vacation rental exceeds 2.5% of total housing: which essentially covers all the most valued neighborhoods.
Real estate professionals and specialized consultancies indicate that the change is already beginning to be felt among Brazilians looking to buy a property in the city.
“It mainly affected the Brazilian client who lives further away, usually still in Brazil, and who is looking for a property in Lisbon as an investment that can also be enjoyed from time to time. For these, the flexibility of having their homes on Airbnb has always been very valued”, evaluates Flavia Motta, partner of Lisboa à Beça, a real estate and migration consultancy specializing in the Brazilian public.
One of the stated objectives of the proposal is to respond to the housing crisis in the capital. According to data from the specialized consultancy Confidencial Imobiliário, the sale price of properties in increased 13.5% in the first quarter of 2022, compared to the same period of 2021.
More recent data from the National Statistics Institute, referring to the third quarter of 2021, indicated that the price of real estate in Lisbon has risen to a new historic high: with the median value of 3,592 euros (about R$ 18,400) per meter square.
In addition to the prices practiced, the Portuguese market has an increasingly smaller offer of properties for sale and rent.
The first initiative to limit the supply of vacation rental units in Lisbon took place in 2018, when the City Council (equivalent to the City Hall) created the so-called containment zones. In these regions, which included neighborhoods with a higher proportion of homes in seasonal rentals, the issuance of new licenses for seasonal units was prohibited.
Coordinated by economist Paulo Rodrigues, the study “The Real Estate Market in Portugal” indicated a 9% reduction in house prices in Lisbon regions where new units per season were prohibited. The number of properties sold in these areas, in turn, fell by about 20%.
It’s easier to rent a vacation in Lisbon than in Barcelona
Lisbon, which has around 510,000 inhabitants, has more vacation rental properties, both in absolute terms and in relative numbers, than Barcelona, which has a population of around 1.5 million people.
A survey carried out before the Covid-19 pandemic indicated that the Portuguese capital had about 22,200 short-term rental units, while the Catalan city had approximately 18,300.
Studying the impact of the vacation rental market in Portugal, Ana Gago, a researcher at the Institute of Geography and Spatial Planning at the University of Lisbon, believes that the public authorities were slow to act.
“The problem of regulation started to be looked at too late. Now, it is already such an established issue that it is very difficult to change”, she evaluates, who considers that the new rules in Lisbon should not have much effect, since do not act to reduce the number of licenses that already exist.
“The problem is that now there are areas in Lisbon where the proportion of local accommodation units exceeds 50%. Half of a parish being a hotel is absurd.”
In the parish of Santa Maria Maior, which includes Alfama, Baixa, Chiado, Castelo, and Mouraria, the proportion of seasonal rentals reaches 52%.
In addition to the effect on housing prices, Ana Gago points out that the high turnover of the public in these neighborhoods ends up reducing the traditional support and security networks in the neighborhoods, especially in a scenario where the population is increasingly aging.
Alep (Association of Local Accommodation in Portugal), the main entity representing the sector, spoke of “political games” and criticized the decision to suspend new units in Lisbon.
“This approval is a worrying message to Lisboners as it signals that the interests of political games will take precedence over the real interests and debates about the future of the city”, says the association, in a note.
“The proposal attacks once again and unjustifiably destabilizes an entire sector that today represents almost half of the city’s tourist overnight stays and that generates income and employment for thousands of Lisbon families”, they complete.
Alep points out that the real supply of accommodation per season is smaller than the number of permits in the city. According to the entity, the actual number of active properties has been reduced by more than 2,000 units since 2019.
While the suspension is in effect, the market has proposed other solutions for Brazilians who want to invest in a property in Lisbon, but do not give up spending a few days of the year at the property.
“Medium-term rentals, only for a few months, have been the main choice. Lisbon is a city with many students and is increasingly sought after by digital nomads. So, this type of arrangement is in high demand”, says Flavia Motta, from the Lisbon consultancy to Beça.
“There are already platforms specialized in medium-term rentals, where it is simple for owners to leave some dates reserved for their own use. It is something that Brazilians have been looking for a lot”, he adds.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
