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The housing package aims to provide support to tenants and landlords alike, increase long-term rental supply while aiming to control the spread of short-term rentals. The proposals also cover incentives that aim to make construction and ownership of properties more affordable. In this article you will find an overview of the current proposals and what stage they are in.

First of all, only two new law decrees have actually been approved:

- Rent Support

- Monthly 30 euros support + 15 euros per child

The first decree that was approved was the "Rent support” which covers tenants who verify effort rates above 35% and declare incomes up to the maximum limit of the sixth IRS tax bracket (38.632€), with a contract celebrated until 15 March 2023.

The second decree introduces the payment of 30 euros monthly per family aggregate and 15 euros per child only if you are considered very poor.

Other proposals are still in the draft-law phase and subject to change.

Everything else is still under discussion and awaiting approval

Below you will find a comprehensive listing of the proposals currently being discussed:

Ending the Golden Visa (ARI) program: The government seems quite adamant about ending the ARI program. However, the initial proposal has some flaws - It prevents the renewal of the program unless the holder has the property as personal use or long-term rental. It is proposing converting the new and pending ARI emissions to a different type of visa. This law-draft moving forward will likely result in the current ARI holders suing the Portuguese government.

As of April 16th 2023, new information came out regarding an updated proposal ending the Golden Visa. The retroactive effects of the law proposal were removed, new applications for the granting of ARI’s will remain valid until the entry into force of the new law. The program will also stay true to its original benefits for past applicants. The initial proposal was rather unethical and broke the trust of many investors. Everyone in the industry was predicting it would not move forward, but it still did a lot of damage. This new proposal is not yet approved either, and new changes may yet come to light.

Support systems for tenants and landlords, simplification of legal proceedings: The government is discussing support systems for tenants and landlords, and simplification of legal proceedings. These measures aim to protect tenants with older leases, allow rent-to-subrent, and enable tenants to register the rental contract in "Finanças." Fair Rent Guarantee will be implemented in new contracts, and vacant properties for more than two years will be mobilized for rent.

Incentives for investment in long-term rental: The government is proposing a package of tax reductions on long-term rentals:

• Contracts between 5 and 10 years, the 25% rate will be reduced to 15%; between 10 and 20 years, the 15% rate will be reduced to 10%; and if it is more than 20 years, it will be reduced from 10% to 5%;

• 6% VAT rate for construction or rehabilitation works mainly allocated to long-term rental;

• Exemption for 3 years of IMI after acquisition or rehabilitation if assigned to PAA (affordable housing program), may apply for another 5 years;

• Exemption of IMT (Municipal Tax on Onerous Transmissions of Real Estate) on the acquisition or purchase for rehabilitation or construction if after rehabilitation or construction is allocated to PAA;

• Exemption of IMI, as long as they are included in the PAA;

• Stamp Duty exemption on housing leases of properties destined for Accessible Rentals;

Incentives for construction and rehabilitation: The Portuguese government has introduced various incentives for the construction and rehabilitation of properties in the country, such as:

• IMT exception for the acquisition of property for resale;

• Ability to change rustic property to construction or urban property;

• Property sellers can benefit from an exemption from capital gains tax if they sell their property to the Government, subject to certain conditions;

• Introduction of the URBANISTIC SIMPLEX program, which aims to simplify and expedite licensing and transaction processes for buildings undergoing rehabilitation.

Limitations and extra tax on short-term Rentals (AL): The government is proposing limitations and extra taxes on short-term rentals, in an effort to encourage more long-term rentals. The Portuguese government is proposing changes to the short-term rental market, known as Alojamento Local.

• New licenses for Alojamento Local can be suspended, mostly on high density areas, and existing licenses can be re-evaluated. Decisions are to be made locally by town halls.

• Creating a new fiscal regime to encourage property owners to transition their Alojamento Local properties to long-term leases.

• Extraordinary contribution imposed on Alojamento Local properties, that will apply towards the affordable housing program. The goal is curbing the growth of the short-term rental market and encourage the transition to long-term rentals

Measures to coercive rehabilitation and rental of property unused for 2 years: The government is proposing measures to force the rehabilitation and subsequent rental of abandoned or dilapidated buildings, in an effort to increase the availability of housing.

Simplification of rehabilitation licensing: The government is discussing simplification of the licensing process for building rehabilitation, in an effort to make it easier for property owners to make necessary repairs.

More incentives to young adults and low-income households: The government is proposing more incentives for young adults and low-income households to access housing, such as government housing programs and tax reductions.

Credits: Supplied Image; Author: Client;

What is the take of all of these?

Overall, the Portuguese Government's proposals recognize the rising housing crisis and the need for affordable housing for all citizens. Some are quite interesting and could prove to be viable solutions, others leave much to be desired and may be addressing the problem in a not so positive way. Most of the proposals are still being discussed in parliament, and thus, subject to change, but it will be interesting to see how these measures develop and how they will shape the housing market in Portugal.

You can watch a more detailed discussion of these measures on this video where a comprehensive discussion is held between Ana Caramujo, the owner of Savvy Cat Realty, and Hugo Pacheco, a licensed lawyer.

Savvy Cat Realty is a Relocation and Investment agency that supports expats getting settled in Portugal in a sustainable and positive way, transparency and tailored services are our motto. Feel free to reach out to Savvy Cat Realty directly at contact@savvycatrealty.com , we’ll be happy to assist you! Also, visit our website at www.savvycatrealty.com where we share a lot of useful information about Portugal and all our services and prices are listed there.