Local Housing: Global Problem, National Solution?

The local housing has been on the agenda and the issues it raises are not exclusive to Portugal. Contrary to what one might think, local housing is not an activity that has just now come about. Artur Filipe da Silva, BAS specialist in real estate law, reflects here on the subject.

Not to mention the “Chambres, rooms and zimmers” signs known to all of us, the fact is that local housing has been around for some time and, in fact, is already regulated as stated in the preamble to Decree-Law no. 128/2014, of August 29 (in the current version resulting from Decree-Law no. 63/2015, of April 23 and establishing the legal regime for the operation of local housing establishments), “Local housing  was created by Decree-Law no. 39/2008, of March 7, amended by Decree-Laws no. 228/2009, of 14 September and 15/2014, of 23 January, to allow the provision of temporary housing services in establishments that do not meet the legally required requirements for tourist accommodations.”


Two line of thought

This is a topic that has recently been the subject of a great deal of debate in many developed countries cities and, of course, also in Portugal, which has received the attention of civil society and public authorities.

In fact, there is a line of thought which states that local housing has contributed to stimulating the economy, in particular by allowing some entrepreneurs and small investors to develop a complementary activity of the traditional tourist offer and at the same time has been the engine of urban rehabilitation in many Portuguese cities.

In a diametrically opposite position, in another line of thought, are those who understand that this activity is driving the residents out of their own cities, is putting in jeopardy the rental market, is imposing on the other owners of the real estate an occupation that, in some cases, they say, is not registered in the housing title of use and also contributes to the existence of an undesirable number of uncontrolled tourists that, ultimately, would lead to the disfigurement of the cities.


The experience of other countries

The arguments for and against local housing are well-identified, but the truth is that there is a need for regulatory intervention, and it seems that even in legislative drafts whose terms were made public, the lack of consensus is evident.

And, as often happens, we can draw some lessons from the experiences of other cities that, faced with the same problem, have already intervened.

Thus, and in a necessarily succinct journey through some paradigmatic cases, we can see that in Germany, more concretely in the cities of Berlin, Hamburg and Munich, it was legislated to prohibit housing rental for tourists, considering that this would be a “Misuse” and stipulating fines that can amount to 100 thousand euros.

Right next door, in Spain, the question, as in Portugal, is not yet clear in all the autonomous regions, which have decision-making powers in this matter. The recommended solutions range from the simple prohibition of new housing (like in Barcelona) or the obligation to establish in the condominiums regulations the prohibition of exercising that activity and, at the same time, establishes a limit of 75% of houses in a building that can be used for local housing, and when this building belongs to a single owner, the percentage drops to 50%, and still establishes a ratio of people depending on the size of the property, as is the case of Madrid.

In France, there is a distinction between real estate for own housing and other real estate. As for private homes, they can be rented to tourists for a period of up to 120 days a year, and once they reach this limit, they must no longer be advertised as such, other real estate to be rented need to change their use, in both cases the fines are high.


The solution for Portugal

In Portugal, five draft laws from the different political quarters concerning local housing are under discussion in the Environment, Regional Development, Decentralization, Local Power and Housing Committee, which can be consulted here.

Here, as abroad, the aim has been to reach a balance between the pros and cons of this activity.

The development of the initially proposed solutions, which indicate that steps are being taken towards a balance between the various interests involved, is clear.

Thus, we look forward for our legislator to be able to reap the benefits of ongoing experiments in other countries, even if everything is still very recent and a definitive conclusion about their effects on the market and people’s lives is not clear, and we hope he won’t import solutions that could jeopardize the confidence that those who invested in the recovery of real estate for local housing have had in the current framework.

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