Government’s plan to release rural land for affordable housing looks like coming unstuck
On Friday, parliament will consider the government’s decree to revise the land law, following an outcry over its implications.
The government insists the changes – potentially allowing rural land to be used for the purposes of accessible housing – “will bring property prices down by 20%”. But very few experts, analysts and others are convinced. They actually see the changes as driving speculation into new areas, and losing nature, even agricultural land, in the process.
Possibly even worse is the basis on which President Marcelo actually rubber-stamped the law.
When he agreed (with reservations) on its promulgation just before Christmas, the country’s head of state said he was doing so because it is “urgent” to use the money available from Europe under the Recovery and Resilience Plan (RRP) to build houses in Portugal.
But, last week, that ‘urgency’ was shown to have been something of a misunderstanding: Bloco de Esquerda coordinator Mariana Mortágua quizzed the prime minister on how many houses were due to be built on the land ‘liberated’ by the change in the law, and his answer was “none”.
The PM maintained his enthusiasm for the law change, nonetheless, as he and his executive clearly believe it will bring benefits into the medium/longer term.
National media, however, see the prime minister’s admission as potentially ‘the last straw’ in this confusing debate.
Municipalities in control?
According to Público, Marcelo will end up re-evaluating the government’s decree from scratch, and thus it may never see the light of day.
But as of time of writing – before whatever results from Friday’s parliamentary debate, forced by Bloco de Esquerda and supported by PCP, LIVRE and PAN – the law change is due to come into effect at the end of the month.
The bones of it are that municipalities will be given the choice to free rural land up for projects for affordable housing.
The government wants to hand decision-making over to borough councils (who have said they feel they need guidance/ training in this regard), at the same time “guaranteeing” that the new law will reduce the price of new homes in metropolitan areas and district capitals by 20%, “setting values below those registered in Portugal in 2024”.
Prices below average values
In information sent to Lusa news agency, the Minister of Territorial Cohesion stressed that the “new law sets maximum prices for new homes that are below the average values of real estate transactions recorded in Portugal in 2024”.
He also used INE National Statistics Institute data to state that “the current average price of the square metre in new homes is 50% higher than that of used housing.
“Being able to buy new homes in which the maximum price limit is 20% below current market prices does not only prevent speculation, it stops it,” he argued.
Using an analysis of the values of new house deeds registered on the Confidencial Imobiliário platform in 2024, the ministry stated that “the average square metre values of houses sold in the municipalities with the highest demand – Greater Porto, Greater Lisbon and district capitals – are notably higher than the maximum limit imposed by Decree-Law 117/2024.
“In addition to Lisbon and Cascais, where the difference reaches 45% and 48%, there are important cities such as Sintra (36%), Viana do Castelo (34%), Gaia (32%), Braga (28%), Vila do Conde (27%), Viseu and Setúbal (26%), Barreiro (24%), Oeiras (23%), Aveiro (23%) and Coimbra (21%), where the limit imposed by the new law is considerably below the prices currently practised on the market.”
Again using data, the government cites the “most recent from the Consumer Price Index (CPI) of the National Statistics Institute” to point out that “in the third quarter of 2024 the average value of the square metre of new housing was 50% higher than the average sale value of used housing – and all the houses that will be born on rustic land that the municipalities transform into construction areas will be completely new”.
But the “virtues of the law are not limited to fighting speculation”, explained Castro Almeida, suggesting it will take “much less than 1% of all available rural land” to solve the country’s housing problems – adding that there are rules about that land, while town councils have opposition councillors, who all have votes, and will act as another form of ‘checks and balances’.
None of this is being taken on face value
Over 600 ‘experts and former political leaders’ have already criticised the measure in an Open Letter, insisting that not only will the law change ‘not solve the housing crisis’, it will “fragment rustic soil that is essential to our food security”, at the same time tossing rustic land into the realm of speculation …
Among signatories are members of previous PS Socialist and PSD Social Democrat governments.
Environmental NGOs have also marked their concerns: Pedro Bingre, forestry engineer and president of one of Portugal’s most respected environmental entities, the League for the Protection of Nature (LPN), has added a new detail (or certainly one that has not been previously discussed by the nation’s media). He told Lusa that once rural land has been re-classified as urban and homes built on it, the taxable value of that land multiplies exponentially.
“As soon as the prospect of a landowner multiplying the value of his land by a thousand times with a subdivision licence hangs in the air, he immediately becomes disinterested in agriculture and forestry,” says Bingre.
“The land remains outside the agroforestry market. And so, as we already have little land suitable for agriculture, and those that are most suitable are the ones that will suffer the most from this price contagion, from the moment the law was announced, prices already started to rise.”
In short, for Bingre, the new law “further precipitates the end of the rural world”.
Considering we already have a government prepared to sacrifice World Agricultural Heritage sites (against the wishes of resident populations) for the mining of lithium and other minerals considered by Europe to be ‘essential for decarbonisation’, the prospect of losing even more land is one that many refuse to take lightly.
Thus, Friday’s debate will be pivotal.
By NATASHA DONN
