Portuguese Landlord Association Claims 59% Rate of Rent Payment Defaults. How Reliable Is The Study?

Survey results indicate landlords are hurting, but that's only one side of the story.

A recent study published by Associação Lisbonense de Proprietários (ALP), entitled “Confiança dos Proprietários,” claimed that 59.1% of landlords in Portugal experienced missed rent payments after the onset of the coronavirus pandemic, and that a vast majority of those landlords reported missing rent payments beginning in April.

Illustration by Bogdan Kamuta

The study also claims that 56% of the missed rent payments were carried out without tenants giving any prior notices nor providing the proper paperwork proving they had lost income, in order to receive a rent moratorium. 

Portuguese law states that a tenant is able to defer rent payments if they have undergone a wage loss of over 20% or if the household’s rental price is over 35% of take-home income as a consequence of the pandemic.  

ALP’s study also makes mention of the interest-free loans the government made available through the Instituto da Habitação e Reabilitação Urbana (IHRU), which were aimed at tenants who were having difficulty paying the rent. Of the landlords surveyed, only 3.2% stated that their tenants took advantage of this service.

António Machado, Secretary General of the Associação de Inquilinos Lisbonenses (AIL) — a local tenant association — took issue with the ALP’s methodology.

“The said ‘study’ by ALP has no scientific or statistical validity,” he tells Atlas. “It is only a biased survey that does not demonstrate a larger and more complex reality.”

Machado adds that “there are more than 700,000 lease agreements in the country. One cannot conclude anything with a minimum amount of rigor from 320 individual responses, without criteria.” 

The fine print of ALP’s study states that their study is based on the survey results of 320 individuals who collectively hold 2,692 rental properties in Portugal. The association also says that they collected their data by sending the survey to their members and followers on Facebook, giving a clear signal of how limited their pool sample was.

We reached out to ALP and asked about the restricted sample pool of their study, and if they felt this limited the statistical significance of their findings. 

“The Study does not have scientific pretensions, but it has a very significant sample, representing more than 2,600 leases,” ALP’s head of press communication, Diana Ralha, tells Atlas. “Moreover, the study confirmed the sense that ALP has of the rental market’s pulse, which we gain through our daily contact with our more than 10,000 associates.” 

Now, 2,600 is a substantially large enough number to have statistical significance. However, the survey did not appear to collect data for each individual property, but rather lumped all the properties together by landlords. 

Machado from AIL raises a serious point of how this story was communicated by local media. According to him, “the so-called ‘study’ had a propagandist and alarmist objective that some media decided to disseminate, without taking  the care to analyze and ponder upon the criteria of seriousness and truth — is this journalism?” 

While the findings put forward in the study should be taken with a grain of salt, ALP does raise a matter that deserves further discussion: the lack of differential treatment for small-scale landlords as opposed to large-scale landlords by the state during the pandemic. 

Their study raises attention to the matter that being a landlord is not synonymous with being wealthy, and that individuals who own a few properties have had much more financial stress placed on them by this pandemic than big landlords. 

Luís Menezes Leitão, ALP’s President, says, “In Spain, for example, the rent moratoriums only applied to large property owners, and small landowners were not obliged to grant them. The State would step in and offer the tenant subsidies in these cases.”

We asked ALP what constitutes a small landlord, to which they offered an inconclusive answer. They began by saying “this concept is very distorted in Portugal,” then went on to explain how in Spain the state protected landlords who owned between five and 10 properties, but Portugal has a long history of “rendas congeladas” — the strong rent-control law which did not adjust for inflation for over 30 years, and in some current cases still hasn’t. 

While many of these rents are slowly being phased out, ALP pointed out that in their recent survey they found 50% of their participants have tenants with “rendas congeladas” — in that case, owning five properties that charge old rent-control rates is not the same as having five properties rented out at current market prices.

It appears that defining what constitutes a small landlord in Portugal is not as simple as stipulating a set number. There is clearly a need for a public discussion on the varying profiles of landlords so that comprehensive policy can be developed.

Atlas spoke to a small landlord — who preferred to remain anonymous — about his experience during the pandemic. He owns four rental properties located in Marques de Pombal, Intendente, Penha de França, and Lumiar.

He told us that none of his tenants requested to defer rent payments, but he explained, “I rent to international tenants mainly, and in March when most of the countries announced that they would close their borders, most of the tenants chose to return back home and be with their families as no one knew how long the lockdown was going to last.”

 As he elaborated further, we saw that each property had distinct circumstances arise. When describing his Intendente property, he said, “luckily, I had three other tenants that were working from home who ended up staying ‘till June and then decided to move back home anyway.”

Signaling that local tenants have been a safer bet, he said, “I am lucky to have a local Portugese family in the Lumiar apartment, that have been there throughout the pandemic with no problems, which was very beneficial for me during this time.”

Our source also gave some insight into how the sector evolved during the summer months.

“The worst time was during the months of July and August, because people had left, no one was traveling and even if they were, it was too scary to allow new people to move in,” he says. 

He also made mention of the entrance of former short-term rental properties into the long-term rental market and how this made it difficult to find new tenants.

As to the current state of his properties, he said, “since universities have opened and movement was being allowed in August and September, I have been able to find new tenants, but had to lower prices around 20% to be able to compete in today’s market.”

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