The Portuguese government’s draft housing bills were approved at first reading in parliament last Friday, with votes in favour from the Social Democratic Party (PSD), the CDS-PP and the Liberal Initiative (IL). Chega abstained.
The package comprises two bills granting legislative authorisation to the government:
- one introducing tax incentives to encourage rental housing and construction at moderate prices, and
- another reforming rules on licensing, urban development and urban regeneration.
The bill containing tax measures was opposed by the Socialist Party (PS), Livre, the Portuguese Communist Party (PCP) and the Left Bloc (BE), while Chega, PAN and JPP abstained.
The second bill, which authorises changes to urban licensing and construction regimes, including the legal regime for urban regeneration, was rejected by the PCP, Livre, PAN and BE, with abstentions from the PS, Chega and JPP.
All housing-related bills presented by opposition parties were rejected. Chega’s proposals to reduce VAT on housing construction and to exempt properties intended for permanent residence – with a taxable value of up to €350,000 – from property tax (IMI) were voted down.
Livre also saw two initiatives rejected, including a proposal to introduce maximum rent caps and another to establish inclusive zoning requirements for public housing quotas in new developments.
A Liberal Initiative bill aimed at reforming construction rules to increase housing supply was likewise defeated.
A bill submitted by the Socialist Party, aimed at strengthening access to permanent housing and combating property speculation, was referred directly to committee and was not voted on at first reading following a procedural request by the party.
What the approved housing package entails
One of the legislative authorisations approved allows the government, led by Prime Minister Luís Montenegro, to amend the VAT Code, the personal income tax (IRS) Code, the Tax Benefits Statute and the property transfer tax (IMT) Code, with the stated aim of increasing the supply of lower-priced housing.
Proposed measures include a reduction in VAT from 23% to 6% on the construction of homes sold for up to €648,000 or rented for up to €2,300 per month, as well as income tax reductions to encourage landlords to place properties on the rental market.
The package also includes another measure involving the application of an IMT rate of 7.5% for non-resident buyers, although there are exemptions that may allow this higher rate to be avoided.
The controversial rent cap of €2,300
During Friday’s parliamentary debate, left-wing opposition parties criticised the government’s use of €2,300 as the benchmark for “moderate” rent levels. In response, Finance Minister Joaquim Miranda Sarmento stressed that the ceiling applies to rents “up to €2,300”, encompassing lower levels such as €1,000, €1,200 or €1,500.
The Minister of Infrastructure and Housing, Miguel Pinto Luz, acknowledged that the housing crisis cannot be solved “overnight”, but said he was confident that the new legislation would help bring down house prices and stimulate the rental market.
Miranda Sarmento also announced that the government is preparing a third package of legal measures aimed at further increasing housing supply. He said the current measures would be temporary and subject to review at the end of the legislative term in 2029, with the possibility of adjustments and improvements.
Among additional measures expected to be introduced shortly are faster eviction procedures, the creation of an emergency housing fund and quicker resolution of disputes involving jointly owned inherited properties.
Last week, the finance minister had told parliament that the measures that have now been approved are expected to cost between €200 million and €300 million, although the final figure remains uncertain and will depend on uptake.
Source: Lusa
