Fear and Loathing in Portugese Social Housing Part I:

Portuguese Social Housing: Stronger, Smarter and Better Than Before.

As I walk around the beautiful old neighborhoods of Lisbon, it is not easy for me to believe these are social housing units.  The bright colors of the buildings seem to fit in well with the sunny skies and intensely colored lemon and orange trees.  The residents smile at me with a hint of curiosity and amusement as I examine the buildings and streets snapping an occasional picture.  Suddenly, a woman rushes out of her apartment and poses a question to me in rapid fire Portuguese.  Unfortunately, the language is not known to me.  Perhaps my picture taking and exploring were intrusive or considered trespassing?  She quickly switched to English and warmly offered me both lemons and oranges off her trees.  In this moment, everything seemed absolutely perfect.  The day was beautiful, the people were wonderful and the buildings and architecture were amazing.  However; this description glosses over the deep troubles and concerns that rocked Portugal and the social housing sector over the last several years.

The Portuguese economy took a punishing hit in the last few years in the wake of the financial crisis.  A deep recession, rising unemployment and austerity measures hurt the government, businesses and people.  Of all of the countries implementing austerity measures in the EU, Portugal may be the most devout.  Pensions were cut, public sectors jobs were trimmed all in order to reduce the national debt and return to the international credit markets.[1]  Perhaps the tough cuts are starting to turn things around.  Portugal’s government laid out plans for 2015 and said an improving economy has reduced economic cuts it needed to make for next year by about a third.[2]  Never the less, the pain inflicted is real.

In February 2015, I traveled to Lisbon in Portugal to meet with the Institute for Housing and Urban Renewal (IHRU).   The institute plays a central role in social housing for the entire country.  I met with Luís Maria Gonçalves the Vice President of the Executive Board.  His major functions include managing the financing programs, credit recovery and construction management.  He graduated at the Faculty of Architecture of Oporto, with an academic background that includes stints in Denmark, Florence and Seville.  His career spans 20 years, combining expertise in the areas of architecture, project management, corporate management, asset evaluation and academic teaching.

IHRU’s goal is to improve in all areas of operations and management.  Staff at IHRU is determined to modernize rent models, improve service and ensure continued investment in the upgrading of social housing stock and neighborhoods.  Despite the struggles of a financial crisis, an older housing stock and issues in the rental market, IHRU is working with banks, staff and other institutions to take a fresh approach to urban redevelopment and social housing.

I turned to Housing Europe in Brussels to learn about the system used in Portugal before interviewing staff.  Social housing is based on legislation from 1983 and described as any housing built with the financial help of the state.  The help can come in the form of benefits for financing, acquisition of land and financial help for the construction of the units.  Generally speaking, housing should be rented or sold to those who are at a certain income or below.  In total 3.3% of the total stock in Portugal is considered social.[3]   “In Portugal there are promoters and managers of social housing both in the public sector, as in the cooperative sector or voluntary sector. Municipalities are the main providers of social housing in Portugal. Housing co-operatives, co-financed by the State, provide housing at controlled costs.” [4]

With those facts as a background, in 1993 the government combined two institutions to oversee social housing in Portugal.  Before combining the two institutions, one had taken care of managing the cities that operated the social housing units.  The other institution handled lending for the development and improvement of social housing.  The combined agency is now called the Institute for Housing and Urban Renewal (IHRU).  IHRU acts as an oversight agency for social housing in Portugal and works with providers and cities across the country.

The cities are the main providers of social housing in Portugal owning and operating the majority of the housing stock.   All together there are around 120,000 units in the entire country.  Of that, the cities manage and operate over 108,000 of the units.  IHRU manages the remainder (around 12,000 units).  The city of Lisbon is the largest provider in the country with around 35,000 units of social housing.  There are “middle man companies” who manage and run properties on behalf of IHRU around the country based on a contract.

I spent time with Luís Maria Gonçalves the Vice President of the Executive Board of IHRU to learn the details of social housing in Portugal as well as some history and a glance into the future.  Our discussion ranged from program design to challenges faced since the financial crisis.  I will post the full interview from last year in a later blog post.

[1] http://www.spiegel.de/international/europe/portugal-looks-to-more-than-austerity-to-solve-economic-crisis-a-911154.html

[2] http://uk.reuters.com/article/2014/04/15/uk-portugal-budget-cuts-idUKBREA3E15O20140415

[3] Information from http://www.housingeurope.eu/resource-119/social-housing-in-europe

[4] http://www.housingeurope.eu/resource-119/social-housing-in-europe


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