Impacts of the New Urban Lease Law and the Non-Regular Resident Tax Regime on Housing Affordability and Urban Regeneration in Lisbon's Historic Centre

The adoption of the euro accelerated the dependent financialisation of the Portuguese economy, which remained structurally backward despite its integration into global finance. The flow of foreign credit towards the real estate, infrastructure, and construction sectors since the mid-nineties fueled
the suburban expansion of Lisbon and the abandonment of its historic centre until the crisis of 2008. After the collapse of that model of urban development, Lisbon's historic centre became a space of opportunity for global real estate investment offering high profitabilities in the international short-term-rental and premium markets. With thousands of abandoned dwellings and tenants paying very low rents, the rent gap of the historic centre was enormous. Since many residents of that territory were tenants paying controlled
rents, it became necessary to change the lease regime in order to rapidly and easily evict them and let investors engage in the transformation of the area. The new urban lease regime liberalised the rental market and triggered the actualisation of rents above the capacity of many tenants in a context of rising
demand for rental housing and strong austerity policies ―and evictions multiplied. The non-regular resident tax regime was implemented by the Portuguese government to attract foreign high-skilled professionals and pensioners. Under this special regime, foreign citizens benefit from a reduced flat personal income tax rate of 20% and any pension income generated abroad is totally tax exempt ―even when not taxed in the country of origin. As a corollary, housing supply for conventional use has dropped significantly and prices have increased dramatically in the historic centre as tourist apartments proliferate and foreign investors multiply. Urban regeneration fuelled by tourism and international investment has not stopped the loss of residents in this area, while the impossibility for many locals to find affordable housing there constitutes a worrying outcome of Lisbon's commodification.