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City Council Suspends Rental Housing Auction. One-Bedroom Flat Had Reached 760 uros

19 April 2018

The Lisbon City Council decided to suspend an auction of homes for rent under the Affordable Rents Program because the prices offered by potential tenants were more than double the base value.

The Urban Rehabilitation Society (SRU) put eight flats on auction in the Ajuda area earlier this year. The objective was to rent the homes under the Lisbon City Council’s Affordable Rents Program, but demand was so strong that the prices offered by potential tenants were more than twice the auction’s base prices. The municipality suspended the auctions, the Diário de Notícias reported.

One of the homes was a one-bedroom flat, offered at a base price of €350. A final offer of €760 was made for the flat. A 77-square-meter two-bedroom triplex, with a base rent of 500 euros, received an offer of more than 900 euros.

The auction was subsequently terminated because it did not comply with the “principles and criteria of the Affordable Rents Program”, the municipality stated. “A new one that fully respects the principles and prices of the Affordable Rents Program will be launched,” the council said, adding that “it will investigate the previous SRU procedure,” and adjust the next auction accordingly.

Between five and seven thousand homes are expected to be built within the Affordable Rents Program. The properties will have “rents between 250 and 450 euros” are forecast to be built in 15 different locations in the capital. The expected rents are well below current market prices.

SRU had already finalised the auction of eight rehabilitated flats, and the associated contracts are to be signed on April 26 and 27.

The decision to cancel the auction was considered correct by the president of the Portuguese Association of Realtors and Real Estate Agents (APEMIP). According to Luís de Carvalho, accepting the results of the auction would “distort the city council’s intention to try to influence the market for rental assets.”

Original Story: Economia Online

Translation: Richard Turner