Finding a good home has always been a challenge. Is it really that difficult to find a place to rent in Portugal, or are these just "horror stories" made up by the already "settled" ones to scare off the newcomers? I will try to present all the facts, and you are to make conclusions.
Rental prices in Portugal
According to statistics from the real estate website Imovirtual, the average rental price in Portugal is 11.6 € per m2 in 2022.
At the top is Lisbon, with an average monthly payment of 1,160€. In Porto, you will have to pay about 912€ per month.
The rent will be cheaper in the suburbs of these two largest cities. For example, in Almada near Lisbon - 840 €, and in Vila Nova de Gaia, a neighbor of Porto - 665 € on average.
The closer to the coast (especially the south), the higher the prices. Real estate in Madeira is also among the price leaders.
At the same time, the minimum salary in Portugal in 2022 is only 705€/month, while the average is 1310€. About 80% of Portuguese earn less than 1,200€.
I'm not insinuating anything, but even JN magazine recently had an article titled "Exorbitant rent costs push families to buy homes."
Additional costs
If you want to rent an apartment, when signing the contract, you will have to pay 3-4 months of rent — payment for the first month and at least 2 months as a rent deposit. Some apartment owners require an amount of 6 or 12 monthly rent payments in advance. I know a case where after a person made an agreement about paying 6 months in advance, the landlord chose other people who offered to pay 12 months in advance, notifying the tenant only a few days before the planned move. For some apartments, there are literally auctions going on.
Setting up water, light, and gas will also have to be paid separately. The cost varies from area to area but averages around 100€.
Most apartments for rent are without furniture, a stove, oven, and even light bulbs. So you'll have to bring everything necessary with you or buy it. Well-furnished ones are in high demand.
So it turns out that even if the rent is 600€ and you have furniture, you will need to spend at least 2000€ (say 3x600€ + utilities' connections) before you move in.
Additional requirements
Some property owners require guarantors who will be required to pay rent or damages if the renter refuses to do so.
When my colleague, a Portuguese originally from Aveiro, wanted to rent an apartment in Vila Nova de Gaia, the owner asked to find guarantors living nearby. My colleague's parents, who had a house in Aveiro, were not suitable. Such a requirement seemed absurd to me, and if I hadn't learned about it firsthand, I probably wouldn't have believed it. But this is a fact.
You’ll also need a Portuguese tax number and bank account to apply for a long-term lease.
Unwillingness to lease property for a long term
According to the study "Radiografia do Mercado de Arrendamento em Portugal 2022" conducted by Aluga Seguro, 15% of the dwellings in Porto are uninhabited because their owners do not want to get involved with renting. The reason is high taxes, the slowness of the bureaucratic machine of justice, the legal insecurity of landlords, and the attractiveness of daily rent.
Daily rent
Every 20th dwelling in Portugal is occupied by tourism. Daily rent is much more profitable than for a long period. This trend has led to the fact that in some tourist cities such as Lisbon and Braga, zones have been identified within which it is impossible to obtain a new license for renting real estate to tourists. This is an emergency measure by local authorities to stimulate the growth of long-term rentals, adopted after protests by locals who cannot find accommodation in their hometown. It's difficult to judge how effective it is. In large cities with tourist areas, the prices of renting or buying housing are too high for the Portuguese. In some zones, such as Cascais, 70% of the real estate belongs to foreigners.
Real estate shortage
Professionals in the field all as one assert: "In Portugal, demand significantly exceeds supply, it is necessary to build new homes." However, it is difficult to do because of high taxation and delays in obtaining construction licenses. There is also a labor shortage in this area due to the reluctance of young people to work with their hands and delays in materials as the supply chains were disrupted during COVID.
Immigration
Portugal has for years been considered an attractive destination for Europeans who want to spend their retirement in the warmth. The country's south is sold out to the point where you sometimes find villages where people speak only English or French and barely understand Portuguese. My teacher, a Portuguese with a real estate business, told me that northern Portugal had taken a liking to northern Europeans in recent years, who are happily buying up "summer cottages" at ridiculous prices in the mountains and forests.
Safety, relatively low prices, the friendliness of the local population, good infrastructure, proximity to major transport hubs, accessibility of global business centers, and relaxed attitude to members of the sex minorities - all these make Portugal attractive for buying real estate.
Brazilians, Angolans, and other inhabitants of former Portuguese colonies have also always made up large diasporas, and in recent years their influx has only increased because of the growing instability in their countries.
The accessible scheme of obtaining Portuguese citizenship for investors, those with passive income, or those who want to open a business in Portugal, as well as the absence of taxation on the sale of cryptocurrencies, has also greatly increased the demand for real estate.
In 2022, the flow of immigrants from Ukraine, Russia, and Belarus has increased. Many are looking for an apartment for a few months; others plan to stay in Portugal forever.
The already small long-term rental market is bursting at the seams.
Reluctance to rent to some foreigners
When you call the ad and speak with a Ukrainian or, for example, Brazilian accent, some Portuguese refuse to rent to you. Sometimes they say openly: I want to rent an apartment only to the Portuguese. It is not necessary to delve into this topic; just note that this factor also complicates the search for housing for long-term rent.
Internal migration
Young Portuguese, as well as newcomers, do not want to live in villages without infrastructure. Modern people are used to free access to restaurants, shopping malls and other entertainment venues. In a big city, there is a greater choice of clinics, specialists and services. Therefore, housing in the city looks more attractive, which further increases the demand for real estate.
Deterioration of mortgage terms
Although renting a home is unaffordable for many Portuguese families, buying a property is not always an option.
After the 2008 crisis, when many families could not pay their mortgages due to rising interest rates and lost their properties, Portugal's Central Bank tightened buyer requirements. Now a mandatory condition for obtaining a mortgage is a minimum down payment of 10% and the maximum credit load on the family is not more than 30% of monthly income. Banks are taking a more critical approach to real estate appraisal. As you can see in the chart below, the appraised value determined by the bank has become lower than the market value of the property after 2008.
Because of low (official) salaries, the Portuguese simply do not pass these criteria. They are either drowning in consumer loan debts, and/or the property value is so high that the monthly mortgage payment (+ other loan payments) exceeds the allowable 30%, or they simply do not have the necessary down payment.
In 2022, this became supplemented by the growth of the Euribor, i.e. the European Interbank Offered Rate (the average interest rate on interbank loans provided in euros) on the background of rising inflation. That is, mortgages have already become even more expensive, which certainly won't reduce the demand for long-term rentals. In another article, you can read about inexpensive real estate in Portugal.
As I see it, the picture is not a happy one. But I do not want to frighten and dissuade you from looking for real estate in Portugal. This article aims to warn you against an unprepared move with a limited budget.
According to a study conducted by the Imovirtual website, it takes, on average, 6 months from the start of your search to the actual rental/purchase of property in Portugal. If you're not financially ready to live for six months paying daily rent, try to find a place before moving.
It will be interesting to hear your conclusion: is finding rented accommodation in Portugal really difficult? Also, feel free to share your experience, if any. How long did it take you to find an apartment/home, and what difficulties did you encounter?
