If renting or even buying a home was a problem for young people before the pandemic, now the problem has gotten worse.
Rental prices and scarce government support, which can in some way stimulate the market, are the main problems young people face. Combined with all this, low wages and a precarious work situation shift the dream of a life of their own and a stable in which they leave their parents’ homes more and more.
Somehow the postgraduate’s life changed behavior.
Nowadays, the solution to the beginning of life could be to share a house with other people on the same terms who on their own are unable to cope with a cost as high as renting a house that is more than half the cost can avail salary. With the mobility of the labor market, young people are increasingly being pushed into renting, which has a detrimental effect on the purchase of housing.
With incomes inaccessible depending on income, urban centers such as Lisbon and Porto, which are considered to be in high demand to have more chances of getting a job, are a headache. There are people who can’t get a job because they don’t have a house that they can afford. Just like there were those who had to quit studying because the price of a room in Lisbon was unbearable.
But what about solutions so that the rental market can be attractive to both owners and tenants at the beginning of life?
The question from the owner’s point of view has two sides that need to be addressed for a better analysis. A first aspect on a tax level and a second on a legal level. Because it’s all interconnected. The door to the rental market may open when more fires are available, but that door needs to be opened by the executive with more attractive tax policies.
First, with the lowering of taxes on rents, which is currently a maximum of 28%, if the contracts have a term of less than two years. The tax rate decreases as the rental period increases. For contracts with a term of 20 years or more, the minimum amount is 10%. These tax rates compared to the duration of the contract do not attract the investor in any way.
The second, more legal aspect is the delay in the eviction process. It should be noted that our law understands that in order for the lease to fail, it is necessary that the tenant not pay three months or five months late. Then it’s another ordeal until an eviction is completed and the property comes back on the market. All of these “big” problems are delaying an entire process in which more fires are available. With no investment incentives in place and with these tax rates in place affecting this type of income the owner is making, it is preferable to keep out the real estate that you may have in the market. Just pay the IMI and it’ll be cheaper.
The other part of the initial question, for those at the beginning of their lives who need to rent a property, needs to be carefully considered by the state.
Porta 65, the mechanism created to help young people under the age of 18 and under 35 (for a young couple, one of the items can be 36 years old, the other no more than 34 years old) that supports a 12 months non-refundable Subsidy income, it is significantly reduced. However, the formula used for the support is that the maximum value of the supported income does not exceed the limit of the current prescription.
A mere example. A 71 square meter T1 in Porto can cost 700 euros a month. Since the price of the requested rent exceeds the maximum allowable value for the area in which the property is located, access to the assistance is not permitted under Decree No. 1. 277-A / 2010 of May 21. The maximum income allowed to benefit from the grant, taking into account the example given here, is 412 euros.
Finding rental properties within the legal maximums for applying for this assistance is like finding a needle in a haystack.
This means that with the utmost urgency it is necessary to review those values which, in my opinion, do not coincide with the reality of the market.
Given the great uncertainty in the job market caused by the pandemic crisis and the rules in place for both homeowners and government support for young tenants, the issue of housing is not in sight and with it life is connected will be postponed because everyone, who rules, “does not know that dreams are a constant in life, as concrete and defined as everything else”.