It’s Tuesday morning, and Manuela, a second-year student at the University of Lisbon (ULisboa), wakes up on her friends’ floor in the city center, gets ready, and walks to class. But she’s not crashing after a night out: she tells me she’s “been living on the floor Monday-Friday after nearly two months of searching for a room.”
Manuela’s story is not unique. Leston, a Portuguese-Angolan resident, told me that his cousin “struggled to move to Lisbon from South Africa after being asked to provide three months’ rent upfront.”
To rent a flat, geographer Agustín Cocola-Gant tells me, residents of the city — known as Lisboetas — “have to dedicate 50-60 percent of their salary to rent if they have a well-paid job. If you earn the minimum wage, you can forget about renting.”
This March, Lisbon ranked the world’s third-least viable city to live in, based on local wages and rents. Its housing market seems far more stressed than larger cities’, such as Paris and New York.
Although prices have risen, the population has fallen. In the 1980s, the neighborhood of Alfama had 20,000 residents. Today it houses one thousand. Elderly residents have been forced out of districts they’ve spent their whole lives in. This exodus “prevents us from establishing communal neighborhood life,” says Ana Gago, a ULisboa researcher who conducted qualitative research in Alfama. “And that, I think, is violent.”
Less than fifty years ago, Lisbon revolted against a right-wing dictatorship and chose people power in its Carnation Revolution. Then, the Right and conservativism were so unpalatable that the new major parties called themselves the Social Democrats (center-right) and Socialists (center to center-left). So how did Lisbon get from that to a situation where it squeezes its people so harshly?
Boom and Squeeze
According to Luís Mendes, a geographer at ULisboa and housing consultant at the local council, Lisboetas were hit by a perfect storm of poor policies.
After democratizing and decolonializing, Portugal came into the mid-1970s with “a weak base for developing,” explains Simone Tulumello, also a ULisboa geographer. He argues that subsequent governments focused on development “activities with low added value, of which tourism is the golden egg.”
Portuguese tourism boomed even into the Great Recession, when the European Central Bank and International Monetary Fund bailed Portugal out of its debt on the condition it implement austerity measures and deregulation for investment. Portugal ran with this, developing the visto gold (Golden Visa), which granted European Union residency to investors who paid in, such as by buying property worth €500,000, and a nonpermanent resident program incentivizing European property investors. Both proved popular.
It also intensified its focus on tourism to regrow incoming investment and jobs. Although this still had low fixed costs, the jobs created were often low paying.
Locally, City Hall attempted to renovate Lisbon’s decaying buildings by promoting further investment and entering the global housing market. Sales tax was cut on renovations, from 21 to 5 percent. “This,” explains Mendes, “is when this neoliberal turn began to flourish.”
Lisbon trumpeted its many merits, adorning the covers of several magazines and topping several rankings. It became the it-girl city for tourists, digital nomads, and start-ups. Madonna and Michael Fassbender moved in.
Local property owners and foreign investors took notice.
“With the boom of Lisbon and the change in its self-perception,” says Tulumello, “people clicked that: ‘OK, now rent is about making lots of money.’”
Several landlords used a new national rental law that facilitated evictions and converted their properties into lucrative holiday rentals, mainly through Airbnb.
As Lisbon became more desirable, prices rose, and speculators arrived.
Despite acute demand, renovations, and new builds, recent figures show that Lisbon lost six thousand homes in a decade. The consensus is that most became tourist accommodation.
“The neoliberal justification for the rental law was that if you give more flexibility to landlords, they will put more housing into the market,” responds Cocola-Gant when I reveal this figure to him, “and now we have fewer homes.”
The situation today, he says, is one where “prices correspond to global, not local, consumption power.”
Not everyone agrees that this tourism-speculation phenomenon is hurting residents. If too many properties were going to tourism, Lisbon shouldn’t have empty homes, suggests Filipa Roseta, the Social Democratic (center-right) councilor for housing. “If you really look at the numbers the big figure is 48,000 empty homes [excluding tourist rentals]. So that is the number we’re worried about right now.”
While 14 percent vacant housing stock is an outrageously high percentage, Gago believes the council uses it to detract from legitimate issues regarding holiday rentals. “It’s important to acknowledge that they are both a problem. The problem of Airbnb is huge.”
No one, including the council, is sure why so many dwellings are empty. Some need renovation, but many may be abandoned by speculators and visa-seekers.
Of Lisbon’s 320,000 dwellings, 48,000 are vacant, 20,000 are Airbnb units, and with unremitting demand, it’s no wonder that prices have skyrocketed when left to the market. When combined with Portugal’s lack of a public housing program on the scale of the UK or even the United States, they push the masses beyond precarity. There are now six thousand households on the city’s waiting list. This is why so many evictees have been forced to leave, with some neighborhoods shrinking by a quarter since 2011.
“[The council] is both renovating and losing people,” argues Tulumello. “It is totally failing.”
Capital Captures the Capital
The situation has created winners as well as losers in Lisbon. While some are evicted, other locals profit through rentals. However, everyone knows someone who’s been adversely affected by the transformation. So why haven’t elected officials taken measures to end this?
The evidence suggests that both Socialist and Social Democrat administrations have acted in capital’s interests. Their dominant ideology is that a market with the space to act as it is “meant to” will ensure a happy equilibrium between supply and demand. This has meant giving the private sector incentives (slashing taxes), flexibility (facilitating evictions), and even public land, which the new housing minister, Roseta, is planning: “We’re designing policies which mix public and private: the city provides the land, and we ask somebody to build. So, by definition, this is more affordable when people rent, because the investor didn’t pay for the land.”
Although a third of these homes must be rented at an “affordable” level, the clear actor for whom the scheme is “more affordable” is the private investor.
Two things motivate maintaining this ideology.
First, the number of voters who keep their money in housing is now significant enough that the council is desperate to keep prices rising, as unsustainable as that may be.
Additionally, the political culture of treating Lisbon as a breeding ground for national office prevents the autonomous municipalism visible in Barcelona (which has curbed Airbnb rentals) and New York (which has sued oil companies).
Accordingly, the measures City Hall has taken have not dared interfere with rising prices and landlord power.
The Programa Renda Acessível (Affordable Rent Program) was supposed to create seven thousand affordable rentals through public-private cooperation. Seven years in, it has only created hundreds. The private sector has instead done its own thing, building profit-maximizing luxury apartments for international elites, speculators, and digital nomads.
In 2020, Mayor Fernando Medina launched a “bold plan” to bring Airbnbs back into the longer-term market. The Programa Renda Segura (PRS, Secure Rent Program) received international attention for its approach to “Airbnbification.” Airbnb landlords missing tourists could lease to the council for up to €1,000 a month for five years, with the council paying everything up front. The council would rent these homes affordably to longer-term tenants.
The effect of this, says Gago, was to help ensure that “during the pandemic, the only sector that didn’t lose money was the landlord.” Landlords now had a minimum floor — funded by the taxpayer — they could rent at, should they struggle to find short-term tenants. And many didn’t struggle. Tourism halved during the pandemic, but it didn’t evaporate.
Despite the early fanfare, PRS brought less than two hundred homes into the longer-term market.
Because tourist revenue was so lucrative, the vast majority of Airbnb landlords believed they would make higher profits waiting for tourists’ return than renting to the council for five years. They were right: tourism has already rebounded to prepandemic levels, a year earlier than analysts predicted.
With PRS, the council “chose not to use the stick but the carrot,” explains Tulumello. “That failed because the other carrot [holding out for short-term rentals] is far more appealing.”
In fact, new evidence suggests that the housing submitted to the program was disproportionately poor quality. Councilor Roseta claims that one home the council acquired through PRS was refused by thirty-seven families. She believes that to save face once the program appeared unpopular, the prior Medina administration:
tried to acquire as many homes as possible . . . accepting almost all applicants. Some landlords applied because they couldn’t let through the market. . . . Now we have bad houses that need renovating, and we can’t find anyone who wants to live in them.”
Although the state has passed some useful laws to protect citizens’ right to housing, such as prohibiting evictions of some over-sixty-four-year-olds, far more intervention is needed.
Lisbon could enforce an existing law, whereby it can expropriate derelict housing from landlords and renovate it for public housing. As Cocola-Gant says, although the council “hasn’t used this on the excuse that it lacks the money, that excuse is untrue because PRS cost millions in tax cuts.”
Another solution he cites for vacant housing is “obliging landlords to rent” at controlled prices if they want to keep these dwellings.
Tulumello also mentions moving from incentives to intervention: “Plan and decide: ‘How many hotels and tourist lets do we want?’ ‘How many authorizations shall we give?’ Then the rest should all be housing; and housing works with housing regulations, with long-term contracts.”
Ending the visto gold and fiscal benefit programs would be a costless mitigation measure as well.
These are also the demands of Habita!, Portugal’s growing housing activism group. The extreme scope of the crisis has catalyzed activism, with low-paid residents occupying some of the two thousand abandoned public dwellings.
That said, this much-needed grassroots mechanism for change faces a formidable mechanism for stasis. In September, the center-right Social Democrats surprised even themselves by winning the mayoralty and ending fourteen years of Socialist Party rule. There were several reasons, but data has shown that changes in the composition of the city’s population may have played a role.
Naturally, as people are pushed out of a desirable city, it tends to be the wealthier who can remain. With Lisbon’s population loss, it is likely that the electorate is not just smaller than in the past but probably wealthier and likelier to prefer neoliberal measures.
If current policies remain, this phenomenon is likely to continue. It illustrates how the Right can gain power over a country’s metropolis.
And despite Lisbon’s perfect storm of policy, the mechanisms are not Lisbon-specific. The Airbnbification of Athenian and Berliner housing is well known, as is the financialization of London and Dublin’s real estate.
Emerging from the pandemic, Lisbon is at a critical juncture. Activism is swelling, but the new administration, unlike the Socialists, “doesn’t acknowledge there is a problem” according to Gago. In a throwback to the eurozone crisis, it says the pandemic’s impact means it may have to find ways to further increase foreign investment. “Now,” says Gago, “we are back to where we were.”