Delivers hope on multiple levels – but does not outline how much it will all cost
AD’s blueprint for the future of housing in Portugal is diverse (listed under five main pillars, or ‘axes’), setting out to ring a number of revolutionary changes and reverse what it calls “the wrong measures” of the last government’s controversial “More Housing (Mais Habitação)” programme.
One of the most positive ideas, for young people, is the prospect of 100% first time mortgages. Combined with the reduction in IRS income tax, this government is setting out to showthat it seeks to encourage qualified young people to ‘remain’ living and earning in this country (see below).
But for older citizens/ investors who found the carpet pulled out from underneath them in PS Socialists’ ‘Mais Habitação’ regime, there is also real hope that the most draconian measures will be short-lived.
The incoming executive considers ‘wrong’ clauses regarding “forced renting” (these gave municipalities the power to forcibly rent empty vacant habitable properties); freezing rents; penalising AL (short-term rentals) and “other legal limitations considered disproportionate”.
Justification for repeal is that it will “mobilise society to effectively stimulate the supply of affordable housing, both in the rental and purchase markets”.
Housing now is part of the ministry of infrastructure, headed up by MP for the Algarve (although a former deputy mayor of Cascais) Miguel Pinto Luz.
The new approach centres less on ‘telling people what they can and cannot do’ and more on promoting “cities that are truly sustainable (and that exclude no one)”. This is presented as cities that:
- promote the well-being of all their inhabitants and allow for the revitalisation and non-gentrification of neighbourhoods and communities;
- invest in education, innovation and solutions that can provide affordable housing (particularly for young people),
- make it possible to welcome new residents;
- promote greater interaction, social integration and the provision of assistance and long-term care services to the senior population,
- and encourage the creation of a more sustainable transport network that unlocks new areas of the territory.
The five strategic ‘axes’:
Increasing the supply of housing (private, public, co-operative)
In order to ensure an increase in the supply of housing – whether private (stimulated by the adoption of various incentive measures, particularly tax measures); public (to support families and individuals in a more vulnerable situation, by mobilising existing housing stock or new construction); cooperative, or the result of a coordinated response with the third sector – the government intends to:
- Make land occupation limitations, urban densities (including high-rise construction) and construction demands and requirements more flexible, as well as the possibility of increasing urban perimeters, “guaranteeing a sustainable and socially cohesive and harmonious use of the territory as a way of guaranteeing access to housing”.
- Create conditions for “agricultural housing” at more affordable prices in rural and inland areas, namely by creating new urbanisable areas in Municipal Master Plans (PDM), especially in municipalities threatened by population loss;
- Inject into the market vacant or underutilised properties and public land
Create an exceptional and temporary scheme to eliminate or reduce tax costs on construction or rehabilitation work on properties intended for permanent habitation, regardless of their location in an ARU (area of urban rehabilitation). How? Through the substantial reduction or elimination of urbanisation, building, use and occupation taxes; the application of VAT at the minimum rate of 6% on construction and rehabilitation works and services, and the extension of tax deductibility.
- Create a Public-Private Partnership programme for “large-scale construction and rehabilitation of both general housing and student accommodation”;
- Encourage new housing concepts: build to rent, mixed housing with urban density bonuses for moderate cost housing, co-living, modular housing, housing co-operatives, dual flexible use of student residences;
- Analyse the new urban simplex;
- Plan and implement a public transport policy and supply “that supports the possibility of increasing urban perimeters and shortening the physical and temporal distances between existing ones, guaranteeing sustainable and socially cohesive and harmonious use of the territory as a way of guaranteeing access to housing”.
Stability and confidence in renting
A long text on Idealista’s property website explains that the new government believes that the challenge of housing “cannot be won without the recovery of confidence in the rental market: “it is imperative to create a climate of confidence and security so that housing suitable for habitation is placed on the market”. And thus, there is the need to:
- Evaluate “counter-reforms” introduced in the last eight years in terms of rent and works, in particular those relating to duration and renewals (“especially those of 2019”);
- Review and speed up the mechanisms for rapid resolution of disputes in the event of non-compliance with rental contracts;
- Evaluate the rent insurance mechanism provided for by law since 2013 and only implemented in 2019
Support for vulnerable tenants
The government recognises that “there are many current and prospective tenants experiencing great difficulties and that a public policy to help them in this period of market imbalance is justified”, but argues that stabilisation should be done “by subsidising tenants who need it, and not by generalised punishment of landlords, which would be paid for by everyone in the long run”. As such, it wants
- The replacement of administrative price limitations with public subsidisation of tenants in situations of vulnerability/ effective need (measured according to the effort rate and income level);
- Maintenance, “until the market stabilises”, of a dynamic rent subsidy that guarantees a contribution to families with high effort rates (meaning families who are spending ‘too much of their income’ securing the roof over their heads).
Supporting young people in buying first homes
The government wants to “free young people from paying two down payments” when buying a house. These expensive additions to the process of house purchase involve IMT (tax) and stamp duty, and the deposit usually demanded for any mortgage. The new plan consists of:
- Eliminating IMT and Stamp Duty for the purchase of own permanent housing by young people up to the age of 35;
- A public guarantee to make it possible for young people to finance the entire price of their first home.
This means that if the government’s programme is approved this week, young people up to the age of 35 will have a much brighter future in this country.
In many ways, this measure is ingenious: political parties voting the government down will be seen by younger generations as parties that think more of political manoeuvering than the good of the country’s citizens.
AD’s housing policy also refers to increasing the scope of the Porta 65 programme – another measure focused on the young – although it does not provide further details, says Idealista.
As Idealista’s text stresses, all these measures will require approval by “an absolute majority of MPs in office” – and this is the great challenge of the AD government: getting its ideas accepted by a parliament filled with antagonistic ideologies.
Another ‘moot point’ is the cost of all these reforms: so far, the financial nitty gritty has not been explained.
natasha.donn@portugalresident.com
