Portugal scraps rent controls

It's all very well and good on paper, but is liable to be the last straw for the roughly one million people affected by it.

Susana Paiva's family owns a building on Lisbon's central Rossio square which is partly occupied by a hotel. The building's estimated real estate value is €4.5 million, which at market prices should bring in about €30,000 a month in rent. But the 34-room hotel, whose room prices start at around €150 and rise to almost double that, pays her just €633 a month. The rental contract dates from 1919.

Paiva has one word to describe that: "ridiculous." She says the old-fashioned mom-and-pop stores which still abound in the area around her building are surviving only because they pay a handful of euros in rent per month. In effect, landlords are subsidizing businesses, she says.

"Low rents for businesses are pernicious in the 21st century," Paiva said. "It means that the people running them don't need to modernize, find new markets, become more competitive." By contrast, the Lisbon Commercial Association, which represents the capital's shopkeepers, predicts the new law will bring "dramatic consequences" as stores, suddenly at the mercy of market forces, shut down and add to the country's record unemployment rate of 15.9 percent.

I think they are right; the small businesses will go to the wall, and Lisbon streets will end up looking like so many derelict High Streets in the UK.

Ms Paiva is in for a few nasty shocks, IMO, she seems to be seeing nothing but €€€€€€ at present.

Also, tourists like 'mom and pop' shops. They can see Lidl anywhere in Europe. Ms Paiva needs to learn a little about what 'market forces' have done to UK High Streets and stop talking nonsense.

The goal of the new law is to free up rental accommodation, making it easier for workers to seek jobs around the country. It also aims to help people avoid racking up mortgage debt; put prime real estate to more productive uses; encourage owners to renovate buildings that are crumbling because they don't earn enough rent money; and provide work for hard-up construction companies.

Where do they think the jobs are going to come from for these imaginary workers? They're kidding themselves if they think newly-rich landlords will spend their money on renovation; they will do the bare minimum and hide the rest away from the government as best they can.