Lisbon ends ban on new holiday-lets after crackdown backfires

Lisbon has overturned a crackdown on holiday lets after licensing restrictions backfired and failed to slow house price growth.A moratorium on new short-term lets was overturned by politicians in December although requirements for holiday lets to have licences were permanently extended to more of the city.The rules were introduced in 2019 following protests in Lisbon with hopes that the controls would reduce housing costs for locals.House prices had risen by 15pc per annum between 2015 and 2019, according to estate agents Savills, but despite the holiday let intervention prices continued to surge over the last seven years.Costs in Lisbon rose to €5,291 (£4,580.66) per square meter for June to September last year, up more than 10pc on the same quarter year before.Less than 2pc of homes in Lisbon were on the market for less than €200,000, according to a report by Airbnb published last July. The median cost of an apartment in Lisbon was more than €450,000. The municipality of Lisbon denied that the licensing scheme contributed to rising house prices.It is estimated that just 45pc of the homes in Lisbon with a short-term let licence are actually used, and the municipality said it had seen a “slow but steady reduction in the overall number of permits active in the city, especially noticeable in some parishes of the historic downtown area”.Other forms of accommodation have also become more expensive. The average cost of a night in a hotel has jumped by 25pc according to Portuguese government data, from €61.80 (£53.50) a night in 2022 to €77.70 in 2024.Other European cities have introduced similar restrictions, which politicians argue will improve housing supply for locals. Short-term lets – and specifically Airbnbs – have become the focus of protests in a number of countries, including Spain and Italy, since the pandemic.In the UK, ministers are trialling a registration scheme – which will not introduce a licensing requirement – for holiday lets, which is set to be rolled out country-wide.It comes after stricter restrictions on short-term lets in Edinburgh were watered down last February, in order to allow residents to provide rooms during the Fringe, a month-long festival held annually in the city.The rules, which meant holiday let owners had to pay thousands for licences or face closure, had led to a 22pc drop in the number of holiday lets in the Scottish capital.It comes on top of council tax rises for second home owners, under rules introduced by former Conservative politician Lord Gove. An extra 38 councils are set to introduce the 100pc surcharge from April, in addition to the 211 councils which adopted the levy last year.In Barcelona, restrictions on holiday lets have been in force for more than a decade, and politicians were forced to back down from a total ban following complaints from the European Commission.A de facto ban was introduced on short-term lets in New York in 2023, leading Airbnb listings to drop by more than 90pc.Sara Rodríguez, Airbnb’s head of public policy for Spain and Portugal, said: “Lisbon’s strict short-term rental rules have failed to make housing more affordable. Instead, they made the city less affordable for everyone, limiting earning opportunities for locals and driving up accommodation prices for visitors.“In cities around the world, the root cause of housing challenges is a lack of available housing – not short-term rentals. We hope more cities will follow Lisbon’s lead.”Alistair Handyside, chairman of the Professional Association of Self-Caterers, said: “It hasn’t actually done any of the stated things that it was proposed that it would do. Having looked at the evidence, they have changed direction. It will have major repercussions and we welcome it.”A spokesman for the municipality of Lisbon said: “Lisbon has certainly not overturned its restrictions on short-term rentals, much to the contrary, we have overhauled our regulation to make it more effective and balanced. We have lifted a temporary suspension, which was set up for a very specific reason.“While we concur that complete prohibition is not desirable and may result in unintended consequences, we have instead defended, and defend, a balanced and proactive attitude towards regulating the activity while promoting a better balance between it an the housing function.”At her second Budget last November, Chancellor Rachel Reeves announced a consultation on “tourist taxes”, which are already being planned in Wales and in Edinburgh. The tax will mean visitors will pay a nightly fee with the money used to fund improvements and invest in the city.The Ministry of Housing was contacted for comment.