Airbnb Hosts Resist Lisbon’s Plan to
Free Up Housing
Free Up Housing
By Hayley Warren and Henrique Almeida
July 28, 2020
Lisbon City Council is introducing measures to turn
Airbnb-style homes into affordable housing. But with many short-term rental
owners holding out for tourism to return, the city’s new program has yet to
attract many owners.
Airbnb-style homes into affordable housing. But with many short-term rental
owners holding out for tourism to return, the city’s new program has yet to
attract many owners.
Under the so-called “Safe
Rent” program, Lisbon is offering to pay as much as three years of rent
up front to lure property owners—many of whom have seen their rental income
evaporate due to coronavirus-related travel restrictions—to switch their short-term
rental units into long-term lets for locals. Property owners may earn a maximum
of 1,000 euros a month ($1,170) for a
four-bedroom apartment in the city center, plus a little extra if they
leave their furniture behind, and their rental income will be exempt from
taxes, according to the rules of the program.
Rent” program, Lisbon is offering to pay as much as three years of rent
up front to lure property owners—many of whom have seen their rental income
evaporate due to coronavirus-related travel restrictions—to switch their short-term
rental units into long-term lets for locals. Property owners may earn a maximum
of 1,000 euros a month ($1,170) for a
four-bedroom apartment in the city center, plus a little extra if they
leave their furniture behind, and their rental income will be exempt from
taxes, according to the rules of the program.
“Many short-term property owners have delayed a decision to
switch to long-term renting because they were waiting for reservations to pick
up in the summer,” said Eduardo Miranda, head of the Association of Local
Accommodation in Portugal, or ALEP. “This hasn’t happened yet and many of these
owners may be considering other alternatives at the moment, including the safe
rent program in Lisbon.”
switch to long-term renting because they were waiting for reservations to pick
up in the summer,” said Eduardo Miranda, head of the Association of Local
Accommodation in Portugal, or ALEP. “This hasn’t happened yet and many of these
owners may be considering other alternatives at the moment, including the safe
rent program in Lisbon.”
One of the main reasons why property owners aren’t switching
to longer term rentals even though reservations of short-term rentals in Lisbon
in the second quarter have fallen to less than 10% of the level of bookings in
the same period last year is that they
may be obliged to pay hefty taxes when they transfer their property from a
short-term rental to a long-term let, according to Miranda.
to longer term rentals even though reservations of short-term rentals in Lisbon
in the second quarter have fallen to less than 10% of the level of bookings in
the same period last year is that they
may be obliged to pay hefty taxes when they transfer their property from a
short-term rental to a long-term let, according to Miranda.
“The short-term rental market had a very important role in
enabling the city of Lisbon to respond to the rising tourist demand,” said
Fernando Medina, the mayor of Lisbon, in a televised interview on July 7. “It
also had a big role in rehabilitating
the city,” he said. Reforms in recent years have brought investment and a
boost to the property market, giving incentive for landlords to convert
run-down buildings into short-term holiday listings hosted by companies such as
Airbnb. According to the Lisbon City Council, there are about 25,000 apartments registered as short-term
rentals, accounting for about 8% of the total. However, in some historic
neighborhoods, short term rentals account for more than 20% of housing units,
prompting the Lisbon City Council in 2019 to suspend new short term rental
licenses in certain areas.
enabling the city of Lisbon to respond to the rising tourist demand,” said
Fernando Medina, the mayor of Lisbon, in a televised interview on July 7. “It
also had a big role in rehabilitating
the city,” he said. Reforms in recent years have brought investment and a
boost to the property market, giving incentive for landlords to convert
run-down buildings into short-term holiday listings hosted by companies such as
Airbnb. According to the Lisbon City Council, there are about 25,000 apartments registered as short-term
rentals, accounting for about 8% of the total. However, in some historic
neighborhoods, short term rentals account for more than 20% of housing units,
prompting the Lisbon City Council in 2019 to suspend new short term rental
licenses in certain areas.
Airbnb Land
Note: Map shows crowd-sourced neighbourhood descriptions by
Hoodmaps
Hoodmaps
Sources: InsideAirbnb, Lisbon city council, OpenStreetMap
Portugal’s capital city is also looking to renovate and
convert vacant public buildings into safe, affordable homes and accelerate the
speed of construction permit approvals to make it easier for residents to live
in the center.
convert vacant public buildings into safe, affordable homes and accelerate the
speed of construction permit approvals to make it easier for residents to live
in the center.
For decades, properties across Lisbon were falling apart due to strict government-enforced rent
controls that deterred landlords from making improvements. Along with
high tax rates targeting the housing market, it often just didn’t seem worth
selling a property. All that began to change after Portugal sought a bailout in
2011 and decided to scrap rent
controls and offer resident permits in the form of a golden visa to attract
wealthy foreign residents and property investors. At the time, about 12,000
buildings were in poor condition or in ruins, nearly 20% of the total,
according to city council estimates. The program, which is still in place,
allows non-Europeans who pay at least 500,000 euros for a property in Portugal
to qualify for a resident permit.
controls that deterred landlords from making improvements. Along with
high tax rates targeting the housing market, it often just didn’t seem worth
selling a property. All that began to change after Portugal sought a bailout in
2011 and decided to scrap rent
controls and offer resident permits in the form of a golden visa to attract
wealthy foreign residents and property investors. At the time, about 12,000
buildings were in poor condition or in ruins, nearly 20% of the total,
according to city council estimates. The program, which is still in place,
allows non-Europeans who pay at least 500,000 euros for a property in Portugal
to qualify for a resident permit.
Earlier this year, Portuguese Prime Minister Antonio Costa
announced plans to scrap the golden visa program in Lisbon and the northern
city of Porto in a bid to end speculation in the real estate market. Other
European cities like Budapest, Paris, Amsterdam and Madrid are also imposing
stricter terms on such rentals in order to reclaim urban neighborhoods from
tourists. Berlin has opted for more extreme measures, freezing rents for five
years in a bid to stay affordable.
announced plans to scrap the golden visa program in Lisbon and the northern
city of Porto in a bid to end speculation in the real estate market. Other
European cities like Budapest, Paris, Amsterdam and Madrid are also imposing
stricter terms on such rentals in order to reclaim urban neighborhoods from
tourists. Berlin has opted for more extreme measures, freezing rents for five
years in a bid to stay affordable.
The property boom that began after Portugal completed the
bailout program in 2014 has turned Lisbon into one of Western Europe’s hottest
markets, with a rise in short-term rentals catering to tourists. Derelict
buildings like this one in Alfama—the city’s historical neighborhood—were converted
to luxury hotels.
bailout program in 2014 has turned Lisbon into one of Western Europe’s hottest
markets, with a rise in short-term rentals catering to tourists. Derelict
buildings like this one in Alfama—the city’s historical neighborhood—were converted
to luxury hotels.
In 2019 Lisbon was named Europe’s leading city break
destination at the World Travel Awards. Tourism accounts for one in every five
jobs in Portugal and 16.5% of gross
domestic product, according to the World Travel & Tourism Council. But
there are signs of overtourism—since 2016 Portugal has welcomed more tourists
than residents (16.3 million / 10.3 million in 2019).
destination at the World Travel Awards. Tourism accounts for one in every five
jobs in Portugal and 16.5% of gross
domestic product, according to the World Travel & Tourism Council. But
there are signs of overtourism—since 2016 Portugal has welcomed more tourists
than residents (16.3 million / 10.3 million in 2019).
The success of the capital has driven house prices up by 64% in the first quarter of the year compared with
the first quarter of 2017, according to the National Statistics Institute,
outpacing wage growth. However, there are signs that the housing market is
cooling. Rent prices in Lisbon fell 6.9% in the second quarter from the
previous quarter, according to Confidencial Imobiliario. That’s the biggest
drop since Confidencial Imobilario started collecting data on Lisbon’s rental
property market in 2010. Home prices in
Portugal are expected to drop 2.5% this year due to the economic effects of
the Covid-19 pandemic, according to S&P Global Ratings.
the first quarter of 2017, according to the National Statistics Institute,
outpacing wage growth. However, there are signs that the housing market is
cooling. Rent prices in Lisbon fell 6.9% in the second quarter from the
previous quarter, according to Confidencial Imobiliario. That’s the biggest
drop since Confidencial Imobilario started collecting data on Lisbon’s rental
property market in 2010. Home prices in
Portugal are expected to drop 2.5% this year due to the economic effects of
the Covid-19 pandemic, according to S&P Global Ratings.
Property Prices Have Far Outpaced Wages
Home-ownership has become increasingly unaffordable for
locals
locals
The improvements to the city have come at a high social
price. “As rental and property prices increased, many locals left the city
center,” said Romao Lavadinho, president of the Association for Lisbon Tenants.
Lisbon’s Alfama district, a historic neighborhood with narrow cobbled streets,
was the subject of a comprehensive survey by researchers Agustin Cocola-Gant
and Ana Gago from Universities of Lisbon and Porto between 2015 and 2017.
Today, Alfama is often pointed out as an example of the consequences of
overtourism in Lisbon.
price. “As rental and property prices increased, many locals left the city
center,” said Romao Lavadinho, president of the Association for Lisbon Tenants.
Lisbon’s Alfama district, a historic neighborhood with narrow cobbled streets,
was the subject of a comprehensive survey by researchers Agustin Cocola-Gant
and Ana Gago from Universities of Lisbon and Porto between 2015 and 2017.
Today, Alfama is often pointed out as an example of the consequences of
overtourism in Lisbon.
Prior to the financial crisis, tourism was still an emerging
industry and there were no hotels or holiday rentals in the neighborhood. By
2016, the proliferation of short-term rentals had changed this once
working-class residential place into a popular tourist area. Over the two-year
study period, the share of housing stock occupied by short-term rentals had
increased from 16% to 25% with 150 flats sold.
industry and there were no hotels or holiday rentals in the neighborhood. By
2016, the proliferation of short-term rentals had changed this once
working-class residential place into a popular tourist area. Over the two-year
study period, the share of housing stock occupied by short-term rentals had
increased from 16% to 25% with 150 flats sold.
More than half of the 21 apartment blocks sold were
converted entirely to short-term lets. The researchers found no instance of any
of the 130 apartments rehabilitated during the period having entered the
long-term residential market.
converted entirely to short-term lets. The researchers found no instance of any
of the 130 apartments rehabilitated during the period having entered the
long-term residential market.
The Four Types of Airbnb Owners
Alfama study found 78% of listings were buy-to-let in 2016
17%
Local landlords who ceased renting to tenants and listed
their flats on Airbnb
their flats on Airbnb
4%
Homeowners that moved to different areas of Lisbon and
rented their flat in Alfama to visitors
rented their flat in Alfama to visitors
78%
Buy-to-let investors
34% Individual
44% Corporate
<1%
Residents sharing their homes
Source: Airbnb, buy-to-let investment and tourism-driven
displacement
displacement
The touristic use of housing stock severely reduces the
supply of apartments available for long-term occupation to such an extent that
people are unable to find units offered in the private rental market. While the
decision to sell the family flat may be voluntary, there is evidence to suggest
that homeowners selling their flats in tourist areas do so less to take
advantage of better opportunities, and more so with resignation, because
tourism disruptions affected their health and daily well-being.
supply of apartments available for long-term occupation to such an extent that
people are unable to find units offered in the private rental market. While the
decision to sell the family flat may be voluntary, there is evidence to suggest
that homeowners selling their flats in tourist areas do so less to take
advantage of better opportunities, and more so with resignation, because
tourism disruptions affected their health and daily well-being.
While rising property and rental prices have pushed some of
Lisbon’s residents to the outskirts, it also left hundreds of low-income
families stuck in makeshift shanty towns and decrepit buildings far from the
glitzy condominiums in the city center.
Lisbon’s residents to the outskirts, it also left hundreds of low-income
families stuck in makeshift shanty towns and decrepit buildings far from the
glitzy condominiums in the city center.
Pandemic Exposes Plight of Portugal’s African Migrants
To make things worse, social
housing accounts for just 2% of the stock of rental units in Portugal,
compared with 20% in Austria, 17% in the U.K., 14% in France and 4% in Spain.
A recent outbreak of new coronavirus infections in some of these poorer
neighborhoods has brought to light some of the social disparities in the city,
which has been made worse due to the recent housing boom.
housing accounts for just 2% of the stock of rental units in Portugal,
compared with 20% in Austria, 17% in the U.K., 14% in France and 4% in Spain.
A recent outbreak of new coronavirus infections in some of these poorer
neighborhoods has brought to light some of the social disparities in the city,
which has been made worse due to the recent housing boom.
Medina, the mayor of Lisbon, hopes his “Safe Rent” program
will provide 1,000 new homes for residents to return to the city center. “The
government has said it is available to double that number if there is enough
interest from the property owners of short-term rentals,” said Medina. “Our aim
is to provide affordable housing and support property owners who, realistically
speaking, won’t have a great deal of demand for their units in the near
future.”
will provide 1,000 new homes for residents to return to the city center. “The
government has said it is available to double that number if there is enough
interest from the property owners of short-term rentals,” said Medina. “Our aim
is to provide affordable housing and support property owners who, realistically
speaking, won’t have a great deal of demand for their units in the near
future.”
So far, the Lisbon City Council, which plans to sublet these
units to locals at a lower price, has approved 177 property owners interested
in joining the program. For Carla Costa Reis, who manages a Facebook page with
more than 70,000 members about the short-term rental market in Portugal, the
reason why many property owners aren’t joining the program is because they
don’t trust the Lisbon City Council.
units to locals at a lower price, has approved 177 property owners interested
in joining the program. For Carla Costa Reis, who manages a Facebook page with
more than 70,000 members about the short-term rental market in Portugal, the
reason why many property owners aren’t joining the program is because they
don’t trust the Lisbon City Council.
According to data from Airbnb, Portugal was the country with
the 10th greatest economic impact on a list of 30 countries which was headed by
the U.S., followed by France and Spain. Airbnb also claims users of the
platform in Portugal generated 2.3 billion euros in direct economic impact
during 2018, and around 10 million euros of tourist tax to the Lisbon chamber.
the 10th greatest economic impact on a list of 30 countries which was headed by
the U.S., followed by France and Spain. Airbnb also claims users of the
platform in Portugal generated 2.3 billion euros in direct economic impact
during 2018, and around 10 million euros of tourist tax to the Lisbon chamber.
But now tourism in
Portugal has come to a halt. A recent spike in new coronavirus cases in
Lisbon and Portugal’s controversial exclusion from the U.K.’s air bridge
program means that the owners of some of these short-term rentals may have to
wait longer for their bookings to pick up. According to the National Statistics
Institute, the tourist accommodation sector registered just 150,000 guests
for the month of May, a 95% decrease
from a year earlier. Revenue
from accommodation declined by 97% to
11 million euros.
Portugal has come to a halt. A recent spike in new coronavirus cases in
Lisbon and Portugal’s controversial exclusion from the U.K.’s air bridge
program means that the owners of some of these short-term rentals may have to
wait longer for their bookings to pick up. According to the National Statistics
Institute, the tourist accommodation sector registered just 150,000 guests
for the month of May, a 95% decrease
from a year earlier. Revenue
from accommodation declined by 97% to
11 million euros.
The share of nights that Airbnb listings in Lisbon are
booked over the next 90 days has risen to 17.8%, according to AllTheRooms
Analytics, which could be a promising sign of a slow recovery for hosts.
However future bookings are still 60% below July 2019 levels.
booked over the next 90 days has risen to 17.8%, according to AllTheRooms
Analytics, which could be a promising sign of a slow recovery for hosts.
However future bookings are still 60% below July 2019 levels.
“It’s not about the
price. If you consider the tax breaks, some property owners that are in a more
fragile situation could effectively consider the rents that are being
proposed,” said Costa Reis, who is also the founder of Turisma, a Lisbon-based company that manages short-term rentals.
“The fundamental problem has to do with a lack of trust. There hasn’t been one
serious measure to tackle the housing problem in Lisbon that doesn’t include
attempts to push the short-term rental market against the wall through
containment zones for short-term rentals or higher taxes.”
price. If you consider the tax breaks, some property owners that are in a more
fragile situation could effectively consider the rents that are being
proposed,” said Costa Reis, who is also the founder of Turisma, a Lisbon-based company that manages short-term rentals.
“The fundamental problem has to do with a lack of trust. There hasn’t been one
serious measure to tackle the housing problem in Lisbon that doesn’t include
attempts to push the short-term rental market against the wall through
containment zones for short-term rentals or higher taxes.”
With assistance from Shelley Robinson, Feargus O’Sullivan,
Jack Sidders, Joao Lima, and Nikki Ekstein
Jack Sidders, Joao Lima, and Nikki Ekstein
Terms of Service Trademarks Privacy Policy ©2020 Bloomberg
L.P. All Rights Reserved
L.P. All Rights Reserved
No comments:
Post a Comment