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"Building Portugal" - A short summary of the government's new housing strategy


Source: FreePik

Further to the measures already included in the Government Program, the Government has now detailed the strategy for combating the housing crisis, by presenting on May 10, 2024, the document "Construir Portugal: Nova Estratégia para a Habitação" (Building Portugal: New Strategy for Housing). 

 

Although it does not yet constitute a real legislative framework, this document mainly sets deadlines for the implementation of some of the measures already presented in the Government Program, but also details others that had not yet been concretely outlined. 

 

The measures presented have been divided into four main objectives:  

1. Stimulating supply by making properties available on the market and (with) reducing costs; 

2. Promoting public housing; 

3. Restoring confidence; 

4. Fostering youth housing. 

 

Within the first category, with a view to stimulating the supply of housing, we highlight the implementation, within 90 days, of public-private partnerships for the construction and provision of affordable housing; the amendment, within 60 days, of the Land Law to allow the use of rustic land for sustainable housing solutions; the granting of state guarantees for loans for the construction of cooperatives, within 90 days; the implementation, within 60 days, of credit lines to promote the new construction of affordable rental housing; and the reduction, to 6%, of VAT on rehabilitation and construction work, with the latter measure having an implementation deadline of the end of the legislature (2028). 

 

As part of the promotion of public supply, it is worth noting that 25,000 houses from the Recovery and Resilience Plan (“RRP”) that are awaiting execution will be unblocked within 10 days; the reinforcement of funding for the development of other housing units not included in the RRP; and the strengthening of the capacity of the Institute of Housing and Urban Rehabilitation, I.P., for the execution of projects underway within the scope of the Affordable Rental Program. 

The measures under the heading "Returning Confidence" are intended, in the government's view, to promote investor confidence by revoking and reviewing some of the measures adopted by the previous government under the "Mais Habitação" legislative package, including the revocation of the Extraordinary Contribution on Local Tourism Accommodation and the review of the rules approved in the Urban Simplex program. On the other hand, the aim is also to implement some of the legislative changes already produced by the previous government, particularly with regard to the drafting and approval of the new Construction Code (this subject was dealt with by us in the article entitled "The Urban Simplex and the ordinary buyer"). 

 

Finally, as part of the measures aimed at promoting young people's housing, which is aimed at people up to the age of 35, we highlight the creation, within 15 days, of a public guarantee model for bank financing for the purchase of the first home, thus eliminating the need to make any capital contribution (currently, young people up to the age of 35 are required to make a contribution of at least 10%); and, also within 15 days, the exemption from Municipal Tax on Transferable Transactions and Stamp Duty on the purchase of real estate for a maximum price of 316. 000 (corresponding to the 4th IRS bracket). 

 

Finally, as part of the measures aimed at promoting young housing, which is aimed at people up to the age of 35, we highlight the creation, within 15 days, of a public guarantee model for bank financing for the purchase of the first home, thus eliminating the need for any capital contribution (currently a contribution of at least 10% is required from young people up to the age of 35); and, also within 15 days, the exemption from Municipal Tax on Transferable Transactions and Stamp Duty on the purchase of real estate for a maximum price of 316. 000 (corresponding to the fourth IRS threshold). 

 

Of all the 30 measures presented in the New Housing Strategy, it is clear that the government intends to speed up the response, thus prioritizing housing policies, but many of these measures remain to be implemented.


Interested parties should therefore keep a close eye on the development of this program, of which the vast majority of measures should be densified within the next four months.



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