Rent reforms rock portugal's property market
Photo credit: Melenama
Portugal is shaking up its housing market this month with a major overhaul of the country's rental property laws.
The rental reform has been on the cards for some time, agreed as part of Portugal's billion-euro bailout, but after months of planning, they are finally here.
The new laws will put an end to an age-old tradition in the country, which has seen tenants living in city Centre apartments for tiny sums. Previously, rents were controlled by the government, with heavy restrictions limiting increases to just a few per cent per year. As a result, residents in places such as Lisbon have enjoyed rock-bottom rates for decades.
"This is where I got married, where my mother died, where my children were born," one retiree, aged 65, told Time Magazine. She pays around €90 per month for her apartment. The rent for her next door neighbour's flat? €3,000.
And she is just one of thousands benefitting from frozen rents, simply because they have lived there for so long. Luis Menezes Leitao, president of the Lisbon Property Owners' Association, told The Associated Press that some people in the city pay as little €5 a month.
These regulated rates have left landlords will little funds to refurbish properties, causing old buildings to crumble. But the law, introduced all the way back in 1910, is set to Change in the coming month as Portugal clambers back from recession.
The market has already been changing, albeit at a slow rate. Since 2006, the inheritance of rent-controlled leases has been abolished, but there are still elderly tenants living out their days in low-priced units around the country. The new rules will give landlord increased rights to evict those tenants as well as raise prices - a scary proposition for those facing hikes.
"I'm already having trouble paying €100," 77 year old widow Teresa Dourado told The AP. "I don't want charity. I've worked all my life. I shouldn't have to beg for anything."
But landlords are keen to get control of their properties. Just as London's rental market has seen rates hit record highs, pricing residents out of homes, Portugal's market has become equally distorted by the opposite extreme. Indeed, prime Lisbon real estate on Rossio Square worth €4.5 million should fetch thousands per month in rent. The current monthly income for one hotel? Just over €600.
"This had to be done sooner or later," Menezes Leitao commented. "Economically speaking, it's unsustainable."
"It shouldn't be our role to provide social security in this country," agreed another.
The government has insisted that the new laws will still contain safeguards for tenants on low incomes. Increases in rents for those like Dourado will be limited to less than 25 per cent over the next five years. Nonetheless, such a big Change remains a challenge.
"What am I going to do?" asked one Lisbon resident, who is both a tenant and a landlord renting a flat out to a 100 year old woman. "Force her to go to a retirement home? She's promised to hit anyone who tries to take her away with her cane. I can see both sides, and I really don't have the courage to kick these people out. I don't know how anyone will."
Even so, one thing is clear: the Portuguese property market is in serious need of an overhaul. And that Change has been a long time coming. 102 years, to be exact.
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