Portugal’s Proposal to Ban New Short-Term Rental Licenses May Hike Prices Portugal's Proposal to Ban New Licenses may Hike Short-term Rental Prices

25.08.2023 - 14:05 / skift.com / Antonio Costa / Srividya Kalyanaraman

Portugal’s move to end its “Golden Visa” program and curtail new short-term rental licenses will not impact the vacation rental market in the country — not in the short-term anyway. 

As a measure to tackle the housing crisis and rising inflation in the country, Portuguese Prime Minister Antonio Costa has proposed to end the Golden visa program, which offers residence to non-European Union nationals for investments made in the economy.  Costa also proposed a ban on issuing new licenses for Airbnbs and other short-term holiday rentals. 

Real estate investments account for over 92 percent of all Golden Visa applications. In the 11 years of the program’s existence, foreign investors have poured over €6 billion ($6.5 billion) into income-generating properties in Portugal. While it’s unlikely to have an impact on the inventory numbers for short-term rental properties, it’s likely that the prices will rise. 

But some industry professionals think it’s too early to make any pessimistic predictions, as the proposal is still up for public debate until March 16. 

“The government made dramatic announcements, but we don’t know the details yet,” said Filipa Leitão de Aguiar, founder and CEO of Lisbon-based property management firm Rent4Rest. “If these measures are passed as they were announced, that will have a huge impact on not only vacation rentals, but also tourism in the country. But I believe the proposal requires a lot of polishing.”

Aguiar is certain that the government will proceed with caution on short-term rental-related regulations given the prominence of local accommodations in Portugal’s tourism industry. “We have enough data to show that short-term rentals account for more than half of total guest nights booked in all of Portugal,” Aguiar said. 

The potential curbs on short-term rentals is a step to assuage public outrage and yield to  demands of the populace as the country is in the midst of a cost-of-living and housing crisis. In 2022, house prices rose by 18.7 percent and inflation hovered around 8.3 percent. The monthly minimum wage in the country is €780 ($850) and last year more than half of the Portuguese earned less than €1,000 ($1,090) euros per month. 

The crisis had thousands of Portuguese take to the streets demanding reforms. And unsurprisingly, programmes like the golden visa which grant wealthy foreign investors citizenship in return for investment are facing the heat. 

And rising rents (Lisbon alone saw a 37 percent in 2022) have pushed the government to consider a ban on issuing new short-term rental licenses across the country. In 2019, Lisbon had the highest ratio of houses to rent for tourists on Airbnb, than any other European capital – with more than 30 rooms per thousand