'Covid created an opportunity': Lisbon turns 20,000 tourist flats into homes

For centuries, the maze of narrow, cobbled streets that make up Lisbon’s Alfama neighbourhood has told the story of the city’s past. But in recent years, as trendy cafes and tourist flats proliferated, the historic quarter began telling a worrying tale of the city’s future.

A rapid transformation had rippled across the city centre as Airbnb-style tourist rentals swelled to a third of the properties. As locals found themselves priced out and communities began hollowing out, many began grumbling about the aftershocks of terramotourism – a tourism earthquake.

That was, at least, until the pandemic brought tourism to a standstill. “In a certain sense Covid has created an opportunity,” Fernando Medina, the mayor of Lisbon, told the Guardian. “The virus didn’t ask us for permission to come in, but we have the ability to use this time to think and to see how we can move in a direction to correct things and put them on the right track.”

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The city seized on the moment to cast new light on a programme that was in the works prior to the pandemic: an ambitious plan to convert some of the city’s more than 20,000 tourist flats into affordable housing.

The initiative, billed by the city as a “risk-free” option, offers landlords the possibility of receiving up to €1,000 a month by renting their properties to the city for a minimum of five years. From there the city takes over, finding tenants and renting the homes at a subsidised rate capped at a third of the household’s net income.

For landlords, the rental income is likely to be lower than what they might earn from tourists down the road. But the city is betting that the long-term, stable income – and the offer to pay an advance of as much as three years’ rent – will win over landlords as they grapple with the uncertainty generated by the pandemic.

Lisbon’s efforts hint at how the pandemic has given governments around the world leverage to reshape their approach to the housing crisis. “Just as employment and work are likely to change profoundly as a result of the Covid-19 crisis, housing is likely to change as well,” Balakrishnan Rajagopal, the United Nations envoy on the right to housing, told Reuters in May. “I hope we see it as an opportunity to reimagine housing for the post-Covid-19 world.”

A handful of governments have started doing just that. In England officials have promised to make 3,300 homes available to rough sleepers by next May, while Venice has struck an agreement that will see some tourist flats rented to university students.

Others have fast-tracked plans already in the works. In June, two hotels in Vancouver, with 173 rooms between them, were purchased to house some of the city’s most vulnerable. “The Covid-19 pandemic has put into even sharper focus our urgent need for housing,” the city’s mayor, Kennedy Stewart, said in a statement. Months earlier the Californian city of San Jose said it would accelerate a $17m plan to build up to 500 tiny homes to house homeless residents during the pandemic.

In Barcelona the virus added impetus to a long-running crackdown on empty homes. In July officials sent a warning letter to 14 banks and investment funds whose stock of 194 homes are believed to have been sitting vacant for two years. If the homes were not rented within a month, the letter warned, the city would move to expropriate them at half their market value and turn them into social housing. “The plan was there,” said Lucía Martín, the city’s housing commissioner. “What Covid did was make it even more necessary.”

Some have set their sights on short-term rentals, in plans that could nudge landlords to list them on the long-term market. Amsterdam recently banned vacation rentals in its central old town and imposed restrictions on rentals in other neighbourhoods, while legislators in the Czech Republic have rolled out legislation aimed at better regulating tourist flats. In September Toronto began requiring short-term rental operators to register with the city, a move aimed at allowing officials to enforce a bylaw restricting short-term rentals to principal residences.

The critical role of housing was laid bare early on in the pandemic as governments around the world turned to lockdowns to rein in the spread of the virus, said Leilani Farha, a former UN special rapporteur on adequate housing. “And it couldn’t be more stark. Because in the face of a novel virus for which we have no medicinal cure or protection, the only protection we have is our homes.”

Months later, however, she described the approach of governments as “patchy”. The housing crisis has sharpened in places like the US, where tens of millions of people face evictions, and India, where reports have emerged of forced evictions in Indigenous communities and informal settlements. Even as the pandemic continues to wreak havoc on people’s livelihoods, many governments have been reluctant to extend protections such as bans on evictions and foreclosures.

“I think that governments did realise, maybe in a new way, ‘Oh dear, we have trouble on our hands,’” she said. “But what I’m not seeing enough of is the structural changes that we need.”

That’s where Lisbon is hoping it will be a mould-breaker. The city’s programme comes with a caveat for landlords in the historical centre: once their contract with the city is up, they will not be able to return the property to the short-term rental market.

“We need to make a shift,” said Medina, the mayor. “It should change the way the housing market works here in the city.” The city has budgeted €4m for the programme, allowing 1,000 properties to take part, with the national government offering to double that number if there is enough interest.

So far the response has been tepid, with just 177 owners expressing interest after the first appeal for participants. “There was a wait-and-see approach,” said Medina, as landlords held out hope that tourism would rebound. The city is expecting an uptick in demand after its second round of recruitment.

Where the programme has already made waves, however, is in the northern city of Porto, where officials announced earlier this year that they would launch their own version.

Ultimately, Medina hopes the initiative will help strike a balance between locals wrestling with the fallout of their town becoming one of western Europe’s hottest property markets and a tourism industry that has played a critical role in ushering in urban renewal and lifting the city out of financial crisis.

“There is that tension: too much of a thing is not good, but too little of it is a problem,” he said. “It’s a question of balance. Having a house cannot be such a burden that you have to have two or three jobs – that’s not a dignified life for anyone.”