A recent study suggests that while rent control can provide short-term assistance for low-income renters, it ultimately harms future generations by contributing to a shrinking housing supply and rising rental costs. Marli Fernandes, a researcher involved in the project conducted by Nova SBE Economics for Policy Knowledge Centre in partnership with the Fundação Calouste Gulbenkian, argues that the policy is unfair across generations and undermines the housing rights of those who come next.
According to Fernandes, rent control can make housing more accessible in the short term, but it tends to reduce long-term rental availability. When tenants are able to stay in properties for long periods due to capped rents, fewer homes are re-entering the rental market. This decreases supply and increases pressure on prices. She referenced San Francisco as an example, where strong rent control policies in the 1990s led to fewer rental units as landlords were discouraged from continuing to rent out their properties.
In Portugal, the rental housing stock has dropped significantly since the 1960s. The 2021 Census indicates that rental homes now make up less than half of the housing market. With fewer properties available for rent, prices have risen. Many older homes are still rented under long-term agreements signed before 1991, often at very low rates. As a result, about 70% of tenants in Portugal pay less than €400 per month. In Lisbon, nearly half of rental contracts fall into this category, with around 30% of tenants paying less than €200 monthly. Porto shows similar figures, with about 45% paying under €200.
In contrast, newer contracts reflect the sharp increase in rental costs. Nearly 29% of rental agreements now exceed €650 per month, and around 10% surpass €1,000. This gap highlights the growing disparity between what older and newer tenants pay, with younger generations facing much higher costs and fewer options.
The study recommends phasing out rent control policies while implementing targeted support for those in need. Researchers propose a two-step approach: first, identify and assist vulnerable families, then move toward a more open rental market. They point to Finland as an example, where lifting restrictions helped expand the housing supply, combined with increased support for low-income renters and investment in public housing.
Portugal currently ranks low in Europe when it comes to social housing, with public housing accounting for just 2% of the total stock. This is far behind countries like Sweden, where around 40% of homes are part of social or cooperative housing systems.
