Portugal is in the midst of a serious housing crisis and one of the causes is Airbnb rentals that drive up prices for locals. Now the country will be taking measures to combat the incursion that, while favoring tourists and the hospitality industry, hurts its residents.
Prime Minister Antonio Costa said the crisis was now affecting all families, not just the most vulnerable and on Thursday he announced a hefty package of measures, including a ban on new licenses for Airbnbs and other short-term holiday rentals. Lisbon residents already have strong feelings against the short-term rental service. On the streets of the city, you will see signs saying “Airbnb destroys Lisbon”.
Rents and house prices have skyrocketed in Portugal, which is among the poorest countries in Western Europe. Last year, more than 50% of workers earned less than 1,000 euros per month while in Lisbon alone, rents jumped 37% in 2022.
Low salaries, a red-hot property market, policies encouraging wealthy foreigners to invest and a tourism-dependent economy have for years made it hard for locals to rent or buy, housing groups have said. Portugal’s 8.3% inflation rate has exacerbated the problem.
It is not clear when the measures, worth at least 900 million euros ($962.19 million), will come into effect. Costa said some would be approved next month and others will be voted on by lawmakers.
Now new licenses for Airbnb will be prohibited – except in less populated rural areas. Portugal is not alone in doing this. New York, for example, has already grappled with this problem, and while not banning the practice, it has become one of the most restrictive.
The incredible growth of the Airbnb platform is often attributed to its superior technology and global reach. Airbnb’s website and mobile app directly and seamlessly connects hosts and guests, regardless of their respective locations. But while popular with tourists, it often has a negative impact on residents, causing local governments to respond by setting restrictions to protect them.
According to The Thread Weekly, the most impactful problem associated with the rise in Airbnb rentals is that it increases the overall costs of rent in a city — diverting potential housing from the long-term rental market to the short-term tourist market. (Harvard Law and Policy Review)
Another is that turning residential areas into de-facto hotels reduces the quality of life for existing residents, who must deal with additional noise, trash, and parking issues associated with increased tourism and sometimes rowdy short-term renters. (Current Issues in Tourism)
Then too, Airbnbs are generally concentrated in expensive neighborhoods, which can displace middle-income renters and increase the speed of gentrification, eventually squeezing out city residents altogether from the area. (Harvard Law and Policy Review)
And finally, most of the benefits of hosting Airbnbs goes to investors and speculators who buy cheap and turn the property into a cash cow.
As Airbnb continues to grow, policymakers on a global scale are beginning to wrestle with the benefits and pitfalls of a large Airbnb presence in their communities, and when they are clearly affecting the housing market and the quality of life for its residents, it takes steps to correct the situation—as is the case in Portugal.
It remains to be seen if the ban on new licenses will spread to other global locations that may be experiencing a similar crisis.
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