That's crazy then. There are incentives to investors who renovate vacant properties, but high demand areas, such as Lisbon, are excluded. Crazy that there would be so many unused buildings - I wonder if anyone is sitting on them waiting for the land-value to go up, or just setting a high sale-price and waiting for it to sell. I would think getting them vacated should be the most profitable, but alas.
6-7 years ago there was A LOT of vacant or derelict properties (like, close to 50% maybe). Ever since real estate price started going up in Portugal, Lisbon has been full steam into renovating. At one point I could count 47 cranes just from my balcony in Lisbon center. It just takes at least 10 years to refurbish 50% of buildings in a city.
The reason there were so many derelict properties was a law in Portugal that prevented landlords to increase rent unless tenants were moving. Some tenant who had been renting for decades paid less than $100/mo. No wonder why landlords had no incentive to fix this. This has now changed, I think?
> Crazy that there would be so many unused buildings - I wonder if anyone is sitting on them waiting for the land-value to go up, or just setting a high sale-price and waiting for it to sell.
It's certainly a combination of various factors.
The low borrowing costs of the 2010s combined with high inflation make it a no-brainer to hang onto these properties. Figure, someone bought one of these properties for US$500k at 4% interest in 2015, after 10 years, that property is probably worth US$1.3-1.4MM and is growing at well over US$100k each year, while the 15 year mortgage payments amount to amount to only US$45k a year, plus property taxes.
So yeah, these buildings make serious money even left empty.
It's unlikely that taxing these properties is going to force people to sell. Housing inflation is so high that taxes would have to be oppressive (six figures a year) and that's a hard to get legislators behind (most of whom are participants in this problem).
For foreign investors, these properties are basically insurance policies. If they are forced to flee their home country, they'll land in a somewhat stable western democracy with enough capital to land comfortably on their feet. So there is a proportion of people who would make this investment even if it lost them money.
There's also the problem of shell games obscuring ownership to the point that nobody really knows who owns the property. So long as the taxes are paid out of an anonymous escrow account, the government isn't going to care about them.
