The prices of real estate in Lisbon has been on an uptick from years. I started to visit in I think 2014 and moved here in 2017. In fact, in 2014, you could buy a 100 square meter apartment in Lisbon for around €265.00. The prices of real estate in Lisbon have more than doubled. The cheapest apartment in Chiado at 100 sq meters costs €549,000. The most expensive will set. you back €6,000,000. The average apartment is selling at €980,000. So why is real estate so expensive in Lisbon? Here are some of the most talked about reasons:
- The French that are buying properties to use as AirBnB properties.
- Americans from California that are willing to pay ridiculous prices in rent.
- Tourists staying in AirBnBs.
- Brazilian and Indian immigrants that are taking up affordable houses.
- Chinese and Russians moving here to get easy entry into the EU and getting their residency via either the Golden Visa or becoming naturalized as Sephardic Jews.
And yes, it is true that these things have affected the housing market. However, there is a lot more to the issues of affordable housing for locals in Lisbon. I will break down all the other reasons why housing in Lisbon has become pretty much unattainable to Lisboetas and Portuguese people in general.
Why Are The Prices of Homes in Lisbon On The Rise?
Tenant Protection Laws
There are some very strong tenant protection laws in Portugal. They were put in place with good intentions, but some contracts are written in such a way that tenants can go for years without paying rent and not be kicked out. I have been told there are people paying €200 for their apartments.
As a result, landlords can’t make improvements on their properties and this causes a horrible cycle for both landlords and tenants.
When tenants leave (aka – pass away, the majority of these leases belong to older people), landlords need to make up for their losses and prefer to rent or sell to foreigners who can afford higher prices.
Crazy Inheritance Laws
Families in Portugal tend to be large. There are cases where a patriarch/matriarch passes away leaving multiple children. If just one of those heirs does not want to sell, the entire crew can’t sell. You will see plenty of derelict, vacant properties in Lisbon. These may fall into this case. You can hear a first hand story about this case on my Podcast interview with the owners of Casa Rene.
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Tax Inequalities
Landlords are taxed quite differently than Alojamento Local properties:
- Landlords are taxed at 28%
- Alojamento locals are taxed only once they make €10,000. The tax rate can be anywhere from 14.5%-48%.
Construction Licenses
Architects in Lisbon have to jump through a lot of hurdles to get projects approved. I have heard from some architects that it sometimes takes up to over a year to get a project approved. Same goes for simple updates of your home.
Commercial vs. Residential
It is incredibly hard to change the license of a commercial property into a residential property. As a result, you will see plenty of commercial properties sitting empty in some neighborhoods.
I would like to hear from Alfacinhas on this. Do you agree/disagree on these being the reasons why real estate is so expensive in Lisbon? What do you think is the number one cause? What could people like me who have moved to Portugal do to make things a bit better? Looking forward to your comments.