Lisbon overturns short-term rental rules that failed to cut housing costs

Lisbon has made a major policy shift by rolling back its strict short-term rental restrictions, after finding that they failed to achieve their intended goal of making housing more affordable.

What Happened
- Restrictions since 2019: Lisbon imposed rules limiting short-term rentals, including a moratorium on new licenses.
- Housing Market Impact:
- House sale prices in the Lisbon Metropolitan Area nearly doubled in growth rate.
- Rental price increases accelerated from 5.7% to 9.2% annually.
- Hotel Prices: Between 2022 and 2024, hotel rates surged by 30%, making the city less affordable for visitors.

New Rules
- The moratorium on new licenses has been overturned.
- Short-term rentals can now account for up to 10% of the local housing supply.
- Locals are empowered to share their homes to offset high living costs.
- About 70% of Lisbon hosts share only one home, and hosting is not their primary job.

Global Context
Lisbon’s experience mirrors other cities:
- Barcelona: Despite a decade of restrictions, rents rose 70% and house prices 60%.
- Amsterdam: Airbnb listings dropped 54%, but rents still rose by over a third.
- Edinburgh: Restrictions caused a 22% drop in rentals, yet rents and hotel prices soared.
- New York City: A near-ban since 2023 cut listings by 92%, but rents kept rising and vacancy rates stayed flat.

Airbnb’s Response
Sara Rodríguez, Head of Public Policy for Spain and Portugal, said the root cause of housing challenges is lack of available housing—not short-term rentals. She welcomed Lisbon’s decision, noting it will create more opportunities for locals and diversify accommodation options.

This is a fascinating case of policy backfire: restrictions intended to ease housing costs ended up tightening supply and driving prices higher.