Portugal Scraps Rent Controls

Under pressure from foreign lenders, Portugal is scrapping its 1910 rent-control law.

The country of 10.6 million people, the poorest in Western Europe, got a 78 billion (about $101 billion) bailout last year. In return, the lenders demanded that Portugal “reform” its economy by raising sales taxes, abolishing rent control, and weakening labor protections. They said ending rent control would improve the economy by increasing real-estate values.

Ordinary Portuguese will have a harder time. Romao Lavadinho, president of the Lisbon Tenants’ Association, estimates that rents on the city’s main avenues could rise from 200-300 euro a month ($256-384) to 1,000 ($1,280). The country’s minimum wage is 485 ($624) a month before taxes, and the average salary is around 800.

“People are in a terrible state of anxiety,” Lavadinho told the Associated Press.

The rent law limited rent increases to a few percent a year, as long as the tenant stays in the apartment. Rent increases on vacant apartments have produced inequalities similar to those in New York. In one building in central Lisbon, the AP reported, an elderly widow pays 196 a month for the three-bedroom apartment she’s lived in since 1962. The new tenant across the hall pays 1,600 for an identical flat.

About 250,000 households, containing almost 10 percent of Portugal’s population, are likely to be affected by the change. The government says it will restrict rent increases for low-income people to 10-25 percent over the next five years, but after that there will be no more limits.

“I’m already having trouble paying 100 euro [$128],” Teresa Dourado, a 77-year-old Lisbon widow, told the AP. “I don’t want charity. I’ve worked all my life. I shouldn’t have to beg for anything.” Dourado lives on a monthly pension of 414 euro.

She has joined the almost weekly protests against the center-right government’s austerity policies, and vows to keep fighting. “They’re not getting me out of here,” she said.