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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Brexit is an opportunity for cities to take back control

Leeds Town Hall. Image: Getty.

The Labour leader of Leeds City Council on the future of Britain’s cities.

As the negotiations about the shape of the UK’s exit from the EU continue, Britain’s most economically powerful cities outside London are arguing that the UK can be made stronger for Brexit – by allowing cities to “take back control” of service provision though new powers and freedoms

Core Cites UK, the representative voice of the cities at the centre of the ten largest economic areas outside London, has just launched an updated version of our green paper, ‘Invest Reform Trust’. The document calls for radical but deliverable proposals to allow cities to prepare for Brexit by boosting their productivity, and helping to rebalance the economy by supporting inclusive economic growth across the UK.

Despite representing areas responsible for a quarter of the UK’s economy and nearly a third of exports, city leaders have played little part in the development of the government’s approach to Brexit. Cities want a dialogue with the government on their Brexit plans and a new settlement which sees power passing from central government to local communities.

To help us deliver a Brexit that works for the UK’s cities, we are opening a dialogue with the EU Commission’s Chief Negotiator Michel Barnier to share our views of the Brexit process and what our cities want to achieve.

Most of the changes the Core Cities want to see can already be delivered by the UK. To address the fact that the productivity of UK cities lags behind competitors, we need to think differently and begin to address the structural problems in our economy before Brexit.

International evidence shows that cities which have the most control over taxes raised in their area tend to be the most productive.  The UK is significantly out of step with international competitors in the power given to cities and we are one of the most centralised countries in the world.  


Boosting the productivity of the UK’s Core Cities to the UK national average would increase the country’s national income by £70-£90bn a year. This would be a critical boost to the UK’s post-Brexit economic success.

Our green paper is clear that one-size fits all policy solutions simply can’t deal with the complexities of 21st century Britain. We need a place-based approach that looks at challenges and solutions in a different way, focused on the particular needs of local communities and local economies.

For example, our Core Cities face levels of unemployment higher than the national average, but also face shortages of skilled workers.  We need a more localised approach to skills, education and employment support with greater involvement from local democratic and business leaderships to deliver the skills to support growth in each area.

The UK will only make a success of Brexit if we are able to increase our international trade. Evidence shows city to city networks play an important role in boosting international trade.  The green paper calls for a new partnership with the Department of International trade to develop an Urban Trade programme across the UK’s cities and give cities more of a role in international trade missions.

To deliver economic growth that includes all areas of the UK, we also need to invest in our infrastructure. Not just our physical infrastructure of roads, rail telecommunications and so forth, but also our health, education and care infrastructure, ensuring that we are able to unlock the potential of our core assets, our people.

Whether you think that Brexit is a positive or a negative thing for the UK, it is clear that the process will be a challenging one.  Cities have a key role to play in delivering a good Brexit: one that sees local communities empowered and economic prosperity across all areas of the UK.

Cllr Judith Blake is leader of Leeds City Council.