Lisbon has announced a program to pay landlords to ditch Airbnb-style vacation rentals in favor of long-term rental contracts with locals, with the aim of making it possible for key workers to live in the city center again.
Tourism has surged in the Portuguese capital over the last decade, helping to push prices up and push residents out. But as the COVID-19 pandemic drains cities around the world of their visitors, Lisbon is one of many tourist hotspots looking to redefine the relationship between the city and its own residents. In Lisbon’s case, that starts with housing.
The city has transformed over the last decade. Once rundown, full of abandoned buildings and battered by the drug crisis that swept the country in the ’80s and ’90s, Lisbon reinvented itself with the aid of a $92 billion national bailout from the European Union in 2011. Since then, waves of tourists have come for the cobbled streets, historic tiled buildings, yellow trams and many steep hills that reward those who climb them with sparkling ocean views.
But, like many European tourist hotspots, Lisbon’s popularity has come at a cost ― especially for the city’s lower-income residents and especially when it comes to housing.
As a condition of the 2011 bailout, Portugal relaxed rent control rules. In the intervening years, foreign buyers have snapped up properties in the capital, lured by relatively cheap prices, tax incentives and the promise of a five-year resident permit for those spending over 500,000 euros ($563,000) on property.
Further driving up prices in the capital, swaths of homes have been turned into short-term vacation rentals on platforms like Airbnb to accommodate the 4.5 million people who visit each year, outnumbering residents nearly 9 to 1. There are around 25,000 registered short-term rental units in Lisbon, about 8% of the city’s total rentals, Mayor Fernando Medina told Reuters.
As a result, housing prices in Lisbon have leapt upwards, rising 9.5% between 2018 and 2019 (they increased 8% in the country overall). Yet salaries have remained relatively low across the country. Average disposable income is around $21,000, according to the Organization for Economic Cooperation and Development, and a quarter of the population is on a minimum wage of 635 euros ($715) a month, according to Reuters.
“We’ve paid a social price,” said Medina, writing in The Independent this weekend. “Essential workers and their families have increasingly been forced out as Airbnb-style holiday rentals have taken over a third of Lisbon’s city centre properties, pushing up rental prices, hollowing out communities and threatening its unique character.”
The city’s new plan, called “Renda Segura” (meaning “secure income”), aims to tackle this by prioritizing the needs of residents over tourists and creating a more stable housing market. While the idea predates the pandemic, the mayor wrote that the fallout from COVID-19 offers a chance to add real momentum.
Under the scheme, the city will essentially pay landlords to turn short-term rentals into longer-term homes for locals, with a particular focus on essential workers. Landlords who join up will rent their apartments to locals for five years at rents that don’t exceed 30% of the tenant’s net income; the city will subsidize the difference between what the tenant pays and market rent. In exchange, apartment owners will be exempt from income tax on the rent they receive and the city will guarantee the full rent.
The aim is to sign up 1,000 rentals this year. So far they have had 177 applications.
Medina’s aim is to bring key workers like hospital and transport employees, many of whom have been pushed out by rising rents, back into the city center. “We want to bring the people who are Lisbon’s lifeblood back to the centre of the city as we make it greener, more sustainable and ultimately, a better place to both live and visit,” he wrote.
The mayor’s focus on affordable housing is key, said Ana Drago, a researcher at the University Institute of Lisbon. “Overpriced housing and evictions have changed the social fabric of the city: working classes and younger generations with low-paid, precarious jobs ... cannot afford to live in the city,” she told HuffPost.
But she called on the city to do more, including significantly limiting the number of short-term rentals and possibly re-imposing rent controls, as has been discussed in other cities including Berlin. “Otherwise, we will have gentrified, socially segmented and Disneyland-like cities,” said Drago.
It’s a point echoed by the Lisbon Tenants Association, which welcomed the city’s plan but also called it “clearly insufficient” given the housing and rental crisis in Lisbon. “It depends on the willingness of Airbnb owners to place their homes on the affordable rental market,” said a spokesperson for the association, who called on the city to use its budget to refurbish public housing stock that’s currently vacant.
A spokesperson for Airbnb said that “60% of local hosts say the additional income they earn from hosting means they can pay the bills and support their families. We take local concerns seriously, which is why we already work with the government to help hosts follow the rules and pay tax.”
Lisbon is not the only city to wrestle with the housing consequences of mass tourism. “There really is a growing amount of evidence that short-term rentals have really increased housing costs and reduced housing availability in cities which receive a substantial amount of tourism,” said David Wachsmuth, an assistant professor in the School of Urban Planning at McGill University in Montreal.
“Lisbon has been very hard hit by this,” he told HuffPost, “but it’s not really in a class of its own. It’s one of dozens or more of cities around the world whose local property market has just been totally overturned by short-term rental.”
In June 2019, 10 other cities asked the European Union for help to counteract the impacts of Airbnb, which they said were forcing local residents out of housing. “European cities believe that homes should be used first and foremost for living in,” read a statement from the city of Amsterdam.
And many cities hope that rebuilding in the wake of COVID-19 offers a chance to do things differently.
Amsterdam, which had restrictions on Airbnb before the pandemic, banned short-term vacation rentals in three central neighborhoods from July 1. Since the start of the pandemic, the Dutch city has seen 21% more rental homes on the market compared with the same time last year, an increase attributed to the decline of Airbnb’s business.
In Spain, Barcelona’s deputy mayor, Janet Sanz, predicts around a third of apartments currently licensed for tourist rental could become normal rentals over the next few years and hopes this will signal a longer-term shift toward prioritizing residents’ housing needs. “What tourist apartment owners want now is stability, and they can find it through conventional rents, which in addition can help to solve the housing needs of our city,” she told HuffPost in June. “We now have a chance to rethink the city.”
And in the U.S., a similar story could be playing out in cities such as New Orleans, where Airbnb has been blamed for driving out residents. “I’ve heard a lot of anecdotal stories about landlords converting into long-term rentals,” Breonne DeDecker, program manager at the Jane Plane Neighborhood Sustainability Initiative in New Orleans, told Fast Company.
“The pandemic has really cut the legs out from underneath the whole short-term rental economy,” said Wachsmuth, who noted there is already a movement in North America away from dedicated short-term rentals back to the long-term housing market.
“It’s going to be a bad time to be a commercial Airbnb operator in big cities for potentially years and years to come,” he said, “which means the Lisbon scheme really feels like it’s arriving at the right time and has a lot of potential.”
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