Local accommodation — taking the middle road

The exponential rise in properties in Lisbon and Porto converted into guesthouses to cater to ever-growing numbers of tourists has soared in recent years. So much so that some local politicians are introducing limits and even prohibitions on permits to convert houses into B&Bs. Property analyst David Sampson suggests a middle way that doesn’t kill the goose laying the golden egg. 

The tourist boom of the last few years has put Lisbon and Porto onto the list of Europe’s most exciting and interesting cities to visit.

With local resident numbers of half a million and a quarter of a million in each city and airport arrivals jumping to 22 million and nine million, respectively, not to mention the daily deluge from cruise ships, the effect on local life can be compared to cities such as Barcelona and Paris where residents have long complained of their lost quality of life.

Tourism – a pillar of economic revival 

The government sees tourism as a pillar of the current economic revival and does not want to kill the goose that laid the golden egg, but it has been under pressure to reduce the impact of the boom, particularly in the housing sector. The country is only just emerging from more than a century of residential rent control when landlords could not afford repairs and thousands of buildings were left to rot, but stories of evictions to make way for tourist developments and upmarket apartments have pushed the government to act. Although the Prime Minister is on record as being against interfering in the rental market, the government has brought in protection against eviction for elderly and long-term tenants, and more measures are on the way for 2019.

Meanwhile, in July, the government passed new rules to control the spread of short-term tourist lettings in order to provide a “better balance between tourism, real estate and local conditions”. The control of this balance has been given to local councils in relation to properties in their area and also to apartment owners in respect of apartments in their individual condominiums.

Pressure zones

To avoid cases of excessive numbers of tourist lettings and a lack of residential space, a local council may nominate certain areas as “pressure zones” where the amount of space available for tourist lettings is limited to a fixed percentage of available accommodation. The percentage is left to the council to determine but its decision has to be based on proper evidence.

In each condominium, any owner can object to the use of other apartments for tourist lettings and the objection must be supported by at least half of the owners by value. The objection must be properly based, such as on repeated acts which disturb the smooth running of the property. The decision of the owners’ meeting to object must be communicated to the council which has the final say, after hearing the parties. If the council confirms the objection, there must be no tourist lettings for six months. In addition, the owners have the right to demand a 30% uplift in the service charge payable by any owner who uses their apartment for tourist lettings.

The law came into force on October 22, 2018 and the Lisbon council has already announced that it will not permit more space to be used for tourist lettings in the three main historic areas of Lisbon. The Porto council is planning similar measures. But while most commentators agree on the need for protection for those living in historic areas of Lisbon, the councils in the rest of the country have objected to any law which seeks to apply a general rule. For them tourism has brought new life to many areas and has led to many old buildings being restored, and it should not be over-regulated.

A middle course

The Mayor of Lisbon, Fernando Medina, has tried to steer a middle course and is opposed to the populist rhetoric which demands that tourism be limited. “We are living at an extraordinary time,” he said recently, “and we have to know how to take advantage of it. We need more tourist lettings to respond to all the visitors who want to come to Lisbon. One-third of the businesses in Lisbon are set up by foreigners and we need lots more office space to accommodate them, otherwise we will not have more services and talent in the services sector.”

The latest measures appear to be a well-balanced response to the tourism pressures. There are going to be some councils and some condominiums which abuse their powers and the law of unintended consequences may throw up surprises, but, meanwhile, Lisbon and Porto continue to attract more tourists and long-term residents.