Housing is a very sensitive issue at the moment in Portugal. After strong social pressure to solve a problem that has been growing in recent years, namely in Lisbon, Porto and also in the Algarve region, the government decided on 16 February that it would intervene in the economy. However, if for some this intervention was long awaited, for others it may represent a violation of their most fundamental rights.
Find below some of the main measures of the “More Housing” bill:
The government will allow commercial properties to be used for living, without any permit being required. In addition, the state will be able to make land available under the housing development contract scheme for the development of affordable housing projects.
Also, they have moved forward with a measure that reduces the IRS tax on rental income by three percentage points, from 28 percent to 25 percent.
Making licensing easier
The idea of this is to speed up licensing processes (which can sometimes take years) through penalising councils when they take too long to issue a license. In addition, developers who do not meet construction deadlines will also be penalised.
The State will pay rents after three months of non-payment, in order to strengthen the rental market. According to the Government, "all eviction requests received after three months of non-payment" may be paid by the State.
On the other hand, the State will be in the position of the landlord to collect the rents in debt and, if there is a "socially reasonable cause" to justify the non-compliance, the State will assume its role by supporting the payment of the rents or by advancing with a re-housing measure.
The Government will provide rent support (a maximum of €200) to support families who are spending more than 35 percent of their income on housing.
Increasing public housing
This proposal provides an exemption from capital gains tax (a tax levied on homeowners who have sold their homes) if they sell their homes to the State. These homes will then be placed on affordable rental market by the state.
There will also be a capital gains exemption for the amortisation of mortgages of primary residence of the owner or their children. In addition, in housing credit, although many banks are making it difficult for their clients to access the fixed rate, it will be mandatory to offer this possibility to those looking for a loan.
With the end of property speculation in sight, the Government has decided to stop issuing golden visas. However, "as for the golden visas already granted, there will only be room for renewal if the houses they have bought are intended for their or their children's primary residence, or if the property is placed permanently on the rental market," the Prime Minister announced.
The rents in new rent contracts will now have criteria that limit their increase. "For new contracts, the new rent must result from the sum of the last rent with the updates that could have been made during the contract period", explained the Prime Minister.
In addition to these two criteria, the value of the new rent may also take into account the inflation of 2 percent defined by the European Central Bank (ECB).
What is worrying property owners?
Given the current housing crisis, owners who have houses with no use may be forced to rent them to families. If this happens, the State might promote the rent itself and then pay the rent to the owner.
"If the owners does not want to rent it to the State, they will be given a formal deadline to use the property", the document states, stressing that only after this deadline "can the State rent the property in a compulsory way, considering the public interest”.
Thus, the State will fund municipalities to carry out works and on those vacant houses to put them after on the rental market.
Another measure that is generating much outrage is the one to encourage the transfer of AL to the rental market. New local accommodation licenses will therefore be banned, with the exception of rural AL in inland councils where there is no housing pressure. As for the licenses currently in force, in 2030 they will be reassessed and then every five years thereafter.
In addition, condominiums will be able to put an end to local accommodation licenses issued without their approval, according to the "More Housing" programme.
In order to encourage the transfer of AL to the rental market, owners who do so will benefit from zero taxation on IRS until 2030, provided that they transfer the properties by 2024.
If on the one hand, housing is a right of all citizens enshrined in the Constitution, on the other hand landlords feel their rights to property and private initiative is being violated by these measures.
The proposal "of compulsory rental of vacant properties is an attack on private property", says the Portuguese Association of Real Estate Developers and Investors (APPII)accuses, considering that, in this case, it will contribute "even more to removing confidence" from investors.
The Hostels Association of Portugal said that the measures presented by the Government for housing, namely for local accommodation, were "not thought through" and will "destroy countless businesses".
"The Hostels Association of Portugal was surprised, last February 16, by the measures presented by the Government for the Mais Habitação package," he said, highlighting that "it was not involved, nor consulted regarding these measures, namely those related to AL". Therefore, Local Accommodation owners are planning a protest for 1 March in Lisbon against these Government measures.
On the other hand, the Association of Lisbon Tenants (AIL) was pleased with the new legislative measures for housing presented by the Government. President Romão Lavadinho considers the measures presented to be positive, but fears that the Government will take too long to put the plan into practice.
"We hope that this is not another decision that takes five or ten years to be in place. So what we propose is that this is implemented quickly, so that tenants and landlords can benefit from these proposals," he told SIC Notícias.
All in all, all those who do not agree with this proposal can express their will until 10 March, as this draft law is in public consultation at https://www.consultalex.gov.pt/ConsultaPublica_Detail.aspx?Consulta_Id=287
Doubt very much that anything will change with these measures as the implementation will not materialise. Ref. Condominiums what is the exact plan? All parties, majority of parties or just one will prohibit AL?
By Rolf Burckhardt from Algarve on 23 Feb 2023, 10:45
The article is unclear about what parts (if any) are already passed into law, and what parts are mere proposals.
Some portions have serious consequences for many of your readers, like the forced rental of vacant properties.
By mark Holden from Algarve on 23 Feb 2023, 12:47
This discourages new development and investment in the housing market. Government should build more low income housing and not put the housing crisis on the property owners. If landlords have more profits in AL why force them to accept less on their investment. Government should encourage growth not stagnation in the economy.
By JOHN M RIBEIRO from USA on 24 Feb 2023, 12:02
About time the home owner in a condominium is being considered for far to long owners have had to put up with disturbances during the summer season. If speculators are left with egg on their chins because they only bought to rent short term to cover mortgages so be it. Far to many properties left empty under the AL when families are unable to rent.
By Peter Dodd from Algarve on 27 Feb 2023, 15:52