Portugal ends new Airbnb permits to mitigate housing crisis

The Iberian country has been heavily reliant on tourism, but in the long term that has shown to be a two-edged sword

The Portuguese government announced a set of measures to tackle the ongoing housing crisis which has seen rental and property prices become unaffordable for an increasing number of residents, especially in the big cities. And the reasons that have been cited for that – foreign tourists and investors.

In order to counteract the influence that wealthy foreigners have on the local property market, the authorities have decided to discontinue two controversial policies: the issuing of new Airbnb licenses and the granting of the so-called “golden visas”.

To address the housing shortage, Prime Minister Antonio Costa also said that the state would lease vacant homes directly from landlords for a period of five years and put them on the rental market. For this purpose, the government will set aside a package of 900 million euros.

The plan to put a roof over one’s head

Divided into five strategic axes, the executive branch's plan proposes to increase the number of properties allocated to residential use; simplify the licensing processes for construction, acquisition and use of housing; increase the supply of dwellings for rental housing; fight speculation; and support families.

But the reasons for the current crisis are complex. Low salaries (Portugal is considered to have the lowest development level in Western Europe), a red-hot property market, policies encouraging wealthy foreigners to invest and a tourism-dependent economy have for years made it hard for locals to rent or buy, housing groups have said. Portugal's 8.3% inflation rate has exacerbated the problem additionally.

It turns out that the country’s popularity in the tourism market, due to its attractive climate year-round, low prices and rich culture, have turned into a curse of sorts, and a problem experienced in other Mediterranean destinations. Attracting wealthy foreigners who can easily outpace locals in the competition for rentals has become an increasingly worrisome phenomenon.

This was the reason why many landlords preferred to turn their properties into short-term rental units and put them up on platforms, such as Airbnb.

What’s more, another venue for attracting foreign investment was the automatic granting of residence, the so-called “golden visas” to foreigners who would invest large sums locally. Rather than setting up businesses, though, they would simply plunge the money into empty properties further driving the general prices up. Looks like the new measures will put an end to this, even though for the past decade it helped generate an income of nearly 7 billion euros for Portugal.

The article has been edited to correct "continue" to "discontinue" when referring to the policies.