Portugal is to introduce one of its most radical social and economic reforms since the country first needed its bailout from the European Union last year. It is due to scrap rent controls, many of which have been in place for decades. There are concerns that many families will be unable to pay their revised rent, and could end up homeless. The changes are being brought in to help boost the economy, as well as modernise it, but there’s little doubt that many people are already struggling to survive due to pay cuts and tax increases designed to pay back the country’s debts.
The current rent laws date back to the beginning of the 20th century, and are seen as a major reason as to why Portugal has fallen into financial difficulties. These rent controls have held back the economy and impeded growth and are something that should have been addressed a long time ago. However it’s an issue that has been avoided due to its unpopularity. Foreign lenders had demanded the changes in rent laws in return for financial help as they had been identified as being one of the causes of Portugal’s stagnation. In addition these lenders have insisted on labour reforms that will mean the end of many long-standing entitlements including jobs for life. These archaic conditions have resulted in decades of low growth and increasing debt.
One of the aims of this new law is to release rental accommodation making it easier for workers to move around the country. It is also hoped these new laws will encourage property owners to renovate buildings using the increased rent money, and that this in turn will increase the number of construction jobs.