A recent O Jornal Económico report reveals that tenants are snapping up approximately 17% of rental homes in Portugal within 24 hours of them going on the market.
In Faro, 33% of new rental listings are taken within 24 hours.
Several countries across Europe have been experiencing a crisis in the rental sector. Monthly rents continue to rise, amid a widespread shortage of available properties. The explosion of the Airbnb-style short-term rental sector is often cited as a key contributor to the issue.
This is certainly the case in Portugal, where the government’s high-profile mais habitacāo initiative has sought to address the problem. The controversial set of measures seeks not only to clamp down on Airbnb rentals, but also to incentivise landlords to switch to offering long-term tenancies to residents, rather than short-term rentals to tourists.
The report, based on data from the Southern European Real Estate Marketplace, reveals that lower cost properties (those below €750 per month) are in particular demand. They accounted for 27% of the homes grabbed by tenants in less than 24 hours.
Demand varies across the country. In Faro, the Algarve’s main city, 33% of new rental listings are taken within 24 hours. This a far cry from the situation after the financial crisis, when “ghost estates” and unfinished build projects dotted the Algarve.
Funchal, the capital of Madeira, also has a particularly hot rental market. 40% of rental homes on the market for between €1,000 and €1,500 are being reserved by tenants in under 24 hours.
Although the launch of Mais Habitacāo may gradually tip the balance, the market for rental homes in Portugal seems set to remain buoyant. Let’s look at what this means both for property owners and aspiring tenants.
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Advice for renters
Funchal has a particularly hot rental market.
The long-term property rental market in Portugal isn’t as crazy as that of the UK. There, there are reports of tenants offering above market rate and agreeing to pay many months in advance, simply to secure a home.
While Portugal’s market isn’t as extreme, these recent figures show that there’s significant pent-up demand. Tenants aren’t wasting time in securing properties the moment they become available.
For aspiring overseas residents, this emphasises the importance of being “on the ground” during the search for a rental property. With the “best” homes being grabbed within a day, that leaves little room for conducting an effective online search. It makes sense to spend a week or two in Portugal, specifically with the objective of securing a property.
Seasonal patterns remain important too. While Airbnb rentals are being clamped down on now, thousands of homes already have a short-term (alojamento local) license.
As every holiday season approaches, owners inevitably begin to be tempted by the Euro signs around renting short term to tourists. Landlords are often much more drawn to a long-term tenant when they’re otherwise contemplating a winter maintaining an empty property.
Advice for owners
The Mais Habitacāo scheme shows how much the Portuguese government wants to encourage people to rent their homes to long-term tenants. As part of it, they are offering tax exemptions to those who switch from short-term to long-term rental.
Those who own rental homes in Portugal may wish to consider switching to a model of long-term rentals. Against a backdrop of rising rents, solid demand, and a favourable tax climate, managing a long-term tenancy might seem an interesting option. It also comes without the financial and administrative overheads of dealing with check-ins, cleans and a constant flow of different visitors.
An opportunity exists in Portugal for investors who wish to profit from property rentals, at the same time as helping to address the shortage of homes for locals.
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