about Raised Rents and Easier Evictions How Reform Could Rock Portugals Housing Market Timecom
Maria Elena Carvalho, a 65-year-old retiree, lives in the same apartment in which she was born, a sprawling, rundown four-bedroom in the center of Lisbon. “This is where I got married, where my mother died, where my children were born,” she says. Carvalho pays her landlord only €81 ($ 115) per month, but lives in fear that her rent may soon rise sharply – were she forced to leave, she would have little chance of finding another apartment she could afford in the capital. Jose Gago da GraÇa, meanwhile, owns a building across town and rents out most of the 170-sq-m (ft) units for €2,750 ($ 3,900) per month. But until recently one tenant was only paying €75 ($ 105), thanks to the rent-controlled lease he inherited from his father. After a decade in court, Gago da GraÇa has finally won the right to evict the tenant, but only because he managed to prove that the man had not lived with his father for at least a year, a requirement for anyone who inherits a lease. “The apartment is now in very bad shape,” he says. “I’ll have to invest a lot of money into it before I can rent it out again.”
But in Portugal neither landlords nor tenants blame the other for their woes. The problem, they say, is the country’s antiquated tenancy laws – laws that, if the International Monetary Fund and the European Union get their way, could soon get a drastic makeover. In exchange for an $ 11 million bailout, Portugal has agreed to make sweeping structural changes, and among them is modernizing the country’s housing market. Good news for landlords, who have long had their hands tied by centuries-old rent-control agreements and a lengthy eviction process. But for renters, reform could mean a double tragedy. Not only could they be forced from the homes that have been in their families for generations, but many could then also find themselves unable to afford to live anywhere else. (Read: With “Portugal’s New Government, the Promise of Harsh Cuts.”)
Portugal’s rent-control laws, which date back to the beginning of the republic in 1910, mean landlords often find it simply isn’t worth their while to rent out their property, leaving abandoned buildings dotting the country. “The market has been completely warped by rent control,” says Luis Menezes Leitao, who heads Portugal’s Association of Landlords. The most beautiful buildings in Lisbon and Porto often have completely symbolic rents. So it’s impossible to invest in the city centers.” The situation is made even trickier for landlords by the country’s slow-paced judicial system – evicting someone who doesn’t pay their rent can take years. “These two problems – not being able to hike rents and not being able to evict tenants – has really traumatized landlords,” says lawyer Pedro Sarragal-Leal, an expert in housing issues.
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