Lisbon is basically bribing foreigners to help revive its housing market – and it’s working

Picture-perfect Lisbon has had a new lease (ha) of life after changes to the property and rental markets. Image: Pedro Szekely

Sometimes in life, it’s good to give your property market a bit of a kick up the backside: get growth firing, keep house prices ticking up, and make sure that there’s plenty of buying and selling and new developing going on.

To anybody living in London – or indeed, most of the rest of the UK – this is a pretty horrifying idea. Indeed, many of us have rejoiced at news suggesting property prices might finally be starting to fall – particularly at the upper echelons of the housing market, where sales of the most expensive properties in London are down 44 per cent over the last year compared to the previous year.

But Lisbon, Portugal’s capital, knows what happens when the opposite is true. For decades, properties across the capital – and particularly in its gorgeous historic centre – were crumbling, peeling, dilapidated, and run-down.

Strict government-enforced rent controls meant that there was no incentive to improve properties that were let out to tenants – or even merely to keep them looking up to shape. And thanks to high tax rates targeting the housing market, it often just didnt seem worth selling a property. 

Enter a CityMetric hero of sorts (there’s nothing we love more than a good city mayor). António Costa was elected mayor of Lisbon in 2007, and quickly got to work deregulating the housing market – perhaps a surprising move, given his credentials as a Socialist Party mayor.

António Costa, now Portugal's Prime Minister. Image: FraLiss.

Rent controls were stripped back, and the long system you used to have to go through to get any planning permission to improve and upgrade a property was made less complicated. At the same time, Costa also cut taxes – most prominently the sales taxes affecting property sales, and VAT levied on new property developments.

Suddenly it became easier to improve a property, knock down a bashed-in old building and build a new development in its place – or even just sell a property on to someone else without getting hit by a huge extra bill.

At the same time, though, the national picture was changing. 2012, possibly the worst year in the story of southern Europe’s debt and the Eurozone crisis, saw Portugal saddled with punitive austerity measures as part of a £65bn bailout package from the EU and the IMF.

So Portugal came up with the ‘golden visa’ programme, in which foreign investors could get a residence permit for Portugal in exchange for throwing a load of money at the Portuguese economy.

Off its main squares, Portugal's back streets were being neglected. Image: Luca Galuzzi.

Though there were all sorts of ways to do this – you could donate €250,000 to a museum or a heritage centre, or you could simply transfer €1m into a Portuguese bank. But thanks to a condition whereby investors have to spend at least a week in Portugal in the first year, and two weeks across the following two years, the most popular way into the golden visa scheme was to buy at least €500,000 worth of real estate. After all, Portugal’s a pretty nice place.

According to the Portuguese government’s own figures, 4,423 such visas have been given to foreign spenders since the scheme was introduced in 2012 – and though the Chinese were originally the vast bulk of such investors, the Turkish have recently surged to take up the offer.

More than £850m has been invested in property through the golden visa scheme in the past year – adding up to just over £2.5bn since the scheme launched.

And it’s worked. Average property prices in Lisbon went up by six per cent in the last financial year, and by 16 per cent over the past three years.

Aggressively photogenic Lisbon. Image: Yasmina2410.

The oldest neighbourhoods in Lisbon’s heart have perked up, retaining their hilly, cobbled, winding charm but shedding the certain is it going to fall over, am I safe walking alone here at night, clapped-out chic these areas used to have.

Of course, the visa scheme and Costa’s deregulatory measures as mayor cannot be taken in isolation. Portugal has pushed tourism, and Lisbon’s tourism business has grown by more than 50 per cent a year for the past three years.


Investing in and improving property has also become more lucrative as services such as Airbnb make it easier for anyone to let out a flat in Lisbon’s old core to city-breakers and summer holidaymakers.

This is all good news, bringing a city that was on its knees economically back to greater health, and keeping its streets in good state by giving property owners an incentive to perk things up.

But Lisbon now needs to be careful. Though the city is still a relatively affordable place to buy property – at an average of £1,193 per sq metre, in comparison to £11,321 in Kensington and Chelsea, or £6,959 in Wandsworth – the incomes of local people haven’t necessarily kept pace with that growth.

If Lisbon can keep a happy equilibrium between supporting government-promoted, deregulation-backed growth in the housing market and avoiding a London-style, income-draining housing crisis where rents and mortgages soar out of the reach of ordinary people, then it’ll have managed something formidable.

In the meantime, I’ll keep rooting down the back of the sofa for that €500,000.

Jack May is a regular contributor to CityMetric and tweets as @JackO_May.

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Budget 2017: Philip Hammond just showed that rejecting metro mayors was a terrible, terrible error

Sorry, Leeds, nothing here for you: Philip Hammond and his big red box. Image: Getty.

There were some in England’s cities, one sensed, who breathed a sigh of relief when George Osborne left the Treasury. Not only was he the architect of austerity, a policy which had seen council budgets slashed as never before: he’d also refused to countenance any serious devolution to city regions that refused to have a mayor, an innovation that several remained dead-set against.

So his political demise after the Brexit referendum was seen, in some quarters, as A Good Thing for devolution. The new regime, it was hoped, would be amenable to a variety of governance structures more sensitive to particular local needs.

Well, that theory just went out of the window. In his Budget statement today, in between producing some of the worst growth forecasts that anyone can remember and failing to solve the housing crisis, chancellor Philip Hammond outlined some of the things he was planning for Britain’s cities.

And, intentionally or otherwise, he made it very clear that it was those areas which had accepted Osborne’s terms which were going to win out. 

The big new announcement was a £1.7bn “Transforming Cities Fund”, which will

“target projects which drive productivity by improving connectivity, reducing congestion and utilising new mobility services and technology”.

To translate this into English, this is cash for better public transport.

And half of this money will go straight to the six city regions which last May elected their first metro mayor elections. The money is being allocated on a per capita basis which, in descending order of generosity, means:

  • £250m to West Midlands
  • £243 to Greater Manchester
  • £134 to Liverpool City Region
  • £80m to West of England
  • £74m to Cambridgeshire &d Peterborough
  • £59m to Tees Valley

That’s £840m accounted for. The rest will be available to other cities – but the difference is, they’ll have to bid for it.

So the Tees Valley, which accepted Osborne’s terms, will automatically get a chunk of cash to improve their transport system. Leeds, which didn’t, still has to go begging.

One city which doesn’t have to go begging is Newcastle. Hammond promised to replace the 40 year old trains on the Tyne & Wear metro at a cost of £337m. In what may or may not be a coincidence, he also confirmed a new devolution deal with the “North of Tyne” region (Newcastle, North Tyne, Northumberland). This is a faintly ridiculous geography for such a deal, since it excludes Sunderland and, worse, Gateshead, which is, to most intents and purposes, simply the southern bit of Newcastle. But it’s a start, and will bring £600m more investment to the region. A new mayor will be elected in 2018.

Hammond’s speech contained other goodies for cites too, of course. Here’s a quick rundown:

  • £123m for the regeneration of the Redcar Steelworks site: that looks like a sop to Ben Houchen, the Tory who unexpectedly won the Tees Valley mayoral election last May;
  • A second devolution deal for the West Midlands: tat includes more money for skills and housing (though the sums are dwarfed by the aforementioned transport money);
  • A new local industrial strategy for Greater Manchester, as well as exploring “options for the future beyond the Fund, including land value capture”;
  • £300m for rail improvements tied into HS2, which “will enable faster services between Liverpool and Manchester, Sheffeld, Leeds and York, as well as to Leicester and other places in the East Midlands and London”.

Hammond also made a few promises to cities beyond England: opening negotiations for a Belfast City Deal, and pointing to progress on city deals in Dundee and Stirling.


A city that doesn’t get any big promises out of this budget is – atypically – London. Hammond promised to “continue to work with TfL on the funding and financing of Crossrail 2”, but that’s a long way from promising to pay for it. He did mention plans to pilot 100 per cent business rate retention in the capital next year, however – which, given the value of property in London, is potentially quite a big deal.

So at least that’s something. And London, as has often been noted, has done very well for itself in most budgets down the year.

Many of the other big regional cities haven’t. Yet Leeds, Sheffield, Nottingham and Derby were all notable for their absence, both from Hammond’s speech and from the Treasury documents accompanying it.

And not one of them has a devolution deal or a metro mayor.

(If you came here looking for my thoughts on the housing element of the budget speech, then you can find them over at the New Statesman. Short version: oh, god.)

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason.

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