The new rent law casts aside protections that date from the early 1900s, and are seen as one of the reasons for Portugal’s economic decay. It’s all part of a plan to jettison a way of life that has been handcuffed to the past, holding back the dynamism needed to put the nation on the path of growth. The measure, long delayed due to its political toxicity, also illustrates how Europe’s financial crisis is snatching away old certainties and expectations — in this case, over something as basic as having a roof over your head.
The change in rent laws was one of the steps demanded in return for the financial lifeline provided by foreign lenders. They identified rent controls as one of the handicaps keeping Portugal mired in stagnation. Similarly, their insistence on labor reforms is taking away long-standing entitlements, such as jobs for life, which choked development, consigning Portugal to low growth and mounting debt. These are precisely the kinds of measures that have triggered massive protests across Europe in recent years, raising questions about the viability of the European project.
I actually don't think hard rent control (though we really should be looking to enact soft rent control in some places) is a good policy, but neither is "destroying the lives of retired old ladies" especially good policy.