ROMEO AND JULIET (the Safe Rent Program and a possible love)

According to the National Institute of Statistics numbers, house prices increased, between the first quarter of 2016 and the first quarter of 2020, by 77.8% in Lisbon and 72.2% in Porto. It doesn't take a genius to realize that some people were making great deals with buying and selling real estate and others struggling to keep up with housing costs.

Tourism statistics have skyrocketed in recent years and, for the sake of a country recovering from a financial bailout, foreign investment has not limited itself to Portuguese beaches and hotels. There are increasingly more people choosing to live in Portugal and more and more companies deciding to operate from here. And there were also, until less than 6 months ago, more and more Portuguese people profiting from this. Indeed, the economic impact generated on the residential market by this momentum carries risks for social stability. But it is also true – and urban rehabilitation in the centers of Lisbon and Porto are the perfect example of this – that there have been substantial improvements in the condition of built heritage and perception of the state of conservation of many neighborhoods and locations.

The incapacity of a significant part of the population to continue living in the heart of the two national metropolitan areas is a problem. A problem that I believe the State must address. And will always do so, if not for a better reason, because the votes of people who fear being homeless matter to whoever is in power. This does not mean that you have to boycott local accommodation or end programs that attract real estate investment. It means that the State must directly contribute to the solution. Something that any investor should be thankful for. Because what many of those who advocate that the state is blind, deaf and dumb don’t seem to understand, is something relatively simple to outline: a country (region or city) with serious problems of housing access is a country with desperate people, and a country with desperate people is a country with more crime (we could say goodbye to our 3rd place at the top of the safest nations in the world) and social tension. And no one wants to have their business near any of that.

"(...) we are facing a tool and a context that can accommodate public housing policies whilst attracting investment."

Safe Rent Program

What about the local administration? There isn’t one local authority website that doesn’t dedicate a directory to sharing housing measures or policies. But the Câmara Municipal de Lisboa (CML) Safe Income Program has some differentiating features. The municipality decided to proceed with the lease of 600 housing units for 5 years (renewable for another 5), which it will then sub-lease at affordable prices to the middle class. In other words, there is an income target through which it is intended to leave out those who don’t need support and, on the other hand, those who don’t demonstrate the capacity to pay the rent that would be attributed to them. The maximum amounts that CML is willing to pay as a tenant are not impressive. But there are two things to bear in mind:

1. the intention is to help the middle class, and this measure only makes sense if you consider real estate that is adequate for this profile;
2. concerning the amounts offered, for contracts signed in 2020, there is an exemption from property tax (IRS / IRC), from IMI (Municipal Property Tax), and from the payment of capital gains in cases of transfer of apartments allocated to local accommodation (if the house is furnished, there can be a 10% increase in the rent, equivalent to the amount the municipality spends on the furniture in question).


Finally, the municipality is responsible for returning the property in the same conditions as it was before the lease. Paying up to three rents in the case of minor repairs or, ensuring larger works, during which the owner will continue to receive the agreed rent.

Maximum rents according to dwelling type and reference values ​​per parish.

Montecchios versus Capuletos

I believe that, in the Lisbon center, less noble neighborhoods located in parishes that are considered prime, may be interesting in the eyes of investors. I am thinking of geographic sub-clusters with market values ​​below those practiced in the rest of the parish, such as Bairro do Rego in Avenidas Novas, or some areas of Parque das Nações parish built before 1998 (and so many other examples scattered throughout the city). These neighborhoods or sets of streets are attractive in the rental market because they have central locations and are served by a good transport network. On the other hand, they lack a social reputation and perception of value that justify, to date, high transaction amounts.
We should remind ourselves that Portugal grants a Golden Visa to anyone who makes real estate investments equal to or greater than half a million euros (distributed over one or more properties). These people are looking, in addition to a document that allows them to move freely throughout the European Union, for investments with a good compromise between profitability and risk, and potential for appreciation. I believe that the CML and the Safe Rent Program ensure the first premise and that the accurate choice of a location adjacent to prime zones forecasts a considerable appreciation within five years.


What am I trying to say? That we are facing a tool and a context that can accommodate public housing policies whilst attracting investment. A kind of best of both worlds where Montecchios and Capuletos can live together and love each other in peace. I found properties in the market that I believe can simultaneously attract foreign investment and contribute to an affordable housing offer in the capital. Two objectives almost always presented to us as conflicting and with mutually limiting interests. And which have been used as a weapon, in a constant dispute for influence over political action.


This review cannot, of course, be applied universally. For example, someone who made improvements will not be able to enjoy a tax deduction on the respective expenses, because taxation doesn’t even apply. And let's be clear: the relevance and potential success of the Safe Rent Program were significantly leveraged by the effects of the pandemic crisis. But this measure responds to real needs. And allow me to be cynical: given that 2021 is a year of municipal elections, I suspect that the city council chief executive will make every effort for this initiative to go as smoothly as possible...

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