Clearly, this is a problem. If you have a market distortion as serious as this one – where there’s virtually no incentive to invest – you’re on a highly unsustainable economic trajectory.

Which is why when Portugal received its bailout package from the International Monetary Fund and European Union following the 2008 financial crisis, it was asked to reform its rent control laws – which it agreed to do.

The hope was that the reforms would allow Portuguese landlords to charge more reasonable and market-oriented rents, as well as do other crazy things like evict tenants that don’t actually pay their rent. Not surprisingly, many fought the changes.

I don’t know precisely how these reforms have ultimately played out in the market over the past few years (if you do, I’d love to hear from you in the comments below), but I do believe that liberalization of the market was, and probably still is, needed.

While paying €5 a month for a 4 bedroom apartment in a desirable central neighborhood might be great for that one individual family, it’s not so great for the economy as a whole. And ultimately that comes around to impact even that household.

Image: Flickr

Clearly, this is a problem. If you have a market distortion as serious as this one – where there’s virtually no incentive to invest – you’re on a highly unsustainable economic trajectory.

Which is why when Portugal received its bailout package from the International Monetary Fund and European Union following the 2008 financial crisis, it was asked to reform its rent control laws – which it agreed to do.

The hope was that the reforms would allow Portuguese landlords to charge more reasonable and market-oriented rents, as well as do other crazy things like evict tenants that don’t actually pay their rent. Not surprisingly, many fought the changes.

I don’t know precisely how these reforms have ultimately played out in the market over the past few years (if you do, I’d love to hear from you in the comments below), but I do believe that liberalization of the market was, and probably still is, needed.

While paying €5 a month for a 4 bedroom apartment in a desirable central neighborhood might be great for that one individual family, it’s not so great for the economy as a whole. And ultimately that comes around to impact even that household.

Image: Flickr

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