With everything that has been said and written about renting in recent times, it is difficult, if not impossible, to talk about the subject without passion and without falling into more or less heated judgements about the limits to updating rents or the forced renting of vacant (private) properties. And, as usual, passion clouds reasoning and objectivity.
It’s a general feeling, as the constitution enshrines, that everyone should have the right to decent housing for themselves and their families. And that the Governance, as the Constitution also says, has an obligation to create the conditions for this to be fully realised.
But far from ideological questions, it’s not possible to set objectives without a clear picture of the causes. Without this, imprecations against gold visas, local accommodation, property speculation and alike, risk having a purely pamphleteering content and, regardless of the measures taken, do nothing to help fulfil the constitutional imperative of the right to decent housing.
Anyone who, like me, has passed the half-century mark, remembers a Lisbon in which renting was the rule, whether rich or poor: Insurance companies, banks and what today, in the modern world of financial buzzwords, would be called family offices, were the major owners of multi-family urban housing and, consequently, the major landlords. Owning rental housing was, at the time, a business and this attracted capital and professionalised structures, and even a multitude of small investors, who kept the market afloat. We all know the effects of the rent freeze on the progressive reduction and near extinction of this market and, worse, the contribution of this freeze to the ruin and decay of the country’s urban centres.
The fact is that, unlike in the past, renting housing is not a business. And nobody invests in what isn’t business. And if people don’t invest even in high rents, it will be much worse if the Governance limits their growth. It won’t do any good to ban gold visas or local accommodation – which will only hurt other business segments and do nothing to benefit residential rentals – or to rename the Letting Centre to (not) operate under the same terms, or to create unusual public rent guarantees which, I suppose, will force already chastised landlords to go through painstaking procedures in countless public departments in order to receive rents that the tenant hasn’t paid. And because none of this will reassure investors or mitigate business risk, all that remains is for the Governance to assume the role of the country’s major landlord, a role that, (un)fortunately and as a matter of course, it knows little or nothing about and should never assume directly.
Believing that the housing rental market will gain new vigour thanks to the growth of a “public housing stock” or half a dozen homes that small landlords will be forced to “rent” by the Governance is an act of faith that is not very consonant with whom wants to be secular and, once again, the delay of a problem whose impact is growing every year. And at a time when many major investors must diversify their portfolios according to ESG (Environment, Social, Governance) criteria, they will once again disregard the housing rental market.
Now, wanting a rental housing market is not an exercise in absurd liberalism. As well as being inseparable from the right to decent housing, it is also the right to be able to reject, for those who understand, situations of co-ownership for two or three decades with the banks or the right to exercise a flexible option as opposed to the rigidity that ownership represents. Governance has also an obligation to ensure that such market exists for everyone, not just for those with weaker resources. In the context of a functioning market, it’s up to them not to build houses and become big landlords, but to create financial mechanisms that directly and effectively support the payment of rents.
Fostering the rental market is only possible with a global view of reality. With studies and statistics on supply and demand. With serious, non-programmatic analyses. And with the courage to realise that if the housing rental market is not once again a “business”, capable of being analysed, at least in the medium term, in terms of costs and profits, of an approximate quantification of risk and, because of this, capable of attracting major investors like the office or retail market does, there may certainly be public housing rental, but there will still be no housing rental market.
From what I read in the Preamble to the draft legislation that makes up the so-called Mais Habitação “package”, there seems to be no such analysis. Between programmatic and circumstantial considerations aimed at justifying the failure of the various legislative interventions of the recent past, the idea remains that, instead of a global strategy to encourage business, we continue to experiment with quick fixes aimed at the same ailments in which, for the same reasons, previous quick fixes failed.
Betting everything on quick fixes only makes us reasonable fixers. I believe that everyone, even the Governance, wants much more than this.
Opinion article by Maria João Canha, Head of Consultancy, published in Magazine Imobiliário, 15th June 2023
