Bloomberg about century-old rent-controls impact on the Portuguese real estate market.

A lot of tourists visiting Lisbon get a shock when they see the condition of many of the beautiful old buildings in Down Town. Parts of town are literately falling apart – with ghost houses that seems to wait for someone or something to change. The problems are century old lease contracts that are frozen at the level dating back to when they were signed by the tenants…

A very complicated situation: On one hand it must be hard for the old people who have lived in their flats for a lifetime to be forced out because they can’t afford the market rates. On the other hand it must  very frustrating for the house owner to see their houses fall apart because the low lease contracts leaves them without an income to finance the renovation. Before we bought our house in Graça we saw several very interesting houses – but because one or to flats were rented out on historical low contracts these houses were useless for business.

Lisbon City is in the middle of the biggest tourist boom ever seen. The city can’t live with settings that reminds tourists of abandoned houses in developing countries or war zones.

Abandoned house Graca.jpg

This old beautiful house in the heart of Graça has been like a ghost house all the years we have lived here. Until a month ago there we’re still 1 or 2 tenants living here paying 20 -30 € pr month. Nobody wants to buy a house with tenants they cant get out – unless of course they are willing to pay 100,000 – 200,000 € to pay them out!

 

 

$36 Rent From Century-Old Freeze Makes Lisbon Landlords Cry Foul

 

bloomberg-logoWhile limits on rents are common in Europe – Berlin recently approved rules to cap rents – the controls in Portugal are some of the oldest and strictest in the EU, the owners’ association said.

Some tenants hold contracts that have barely budged after being passed down from one generation to the next.

 

 

The extension of rent limits will delay a reform by the center-right government in 2012 aimed at increasing the supply of properties on the market, attracting investment and encouraging landlords to renovate buildings that were falling apart because they didn’t earn enough rental income.

 

Read Henrique Almeida’s story in Bloomberg Market

 

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