AD government sets out to stop qualified young people leaving country by ‘fixing’ housing impasse
Portugal’s minority centre-right government presented its reworked blueprint to fix the country’s crippling housing crisis on Friday, aware that some of the measures within the ‘Construir Portugal’ (Build Portugal) programme will need minority party support in order to reach the statute books.
But hopes are that party-political scheming won’t get in the way of ideas that will ring massive positive change for the country’s under-35s – an age bracket that has been blocked from getting on the housing ladder, and moving forwards in life due to elevated prices of property – both to buy and to rent.
A recent survey showed that more than seven in 10 young Portuguese still live with their parents because they simply cannot afford not to. It is among the ‘worst results’ in Europe – powered by the country’s high property costs in sought-after areas (with offers of employment), low salaries and the chronic lack of new construction over the last 20 years.
Luís Montenegro’s AD government is hoping to turn this all around. But he needs the support of opposition parties – and this is where things could look ‘bleak’: minority parties appear more intent on ‘bringing down the government’ than on nodding through policy changes that will help the country.
AD’s plan seems to be in inching around the ‘icebergs’ by trying to promote the most popular measures first – the idea being that these will hopefully register positive results very quickly.
To this end, an extraordinary Council of Ministers is planned (to be “announced soon”) in which measures directed at the country’s under-35s will be approved.
These, without doubt, spell hope to many thousands of young people, particularly those wanting to start families.
The flip side of the plan is aimed at dissuading the ‘brain drain’: the exodus of qualified young people to work in countries where they can actually afford a roof over their heads.
Thus, the intention is to do away with purchase taxes that add to the cost of transactions (IMT and Stamp Duty) and give a public guarantee of 100% bank financing for properties up to €316,000.
Measures will be linked to earnings: young people on elevated earnings will not qualify for this State support.
The government equally wants to reformulate the Porta 65 programme, allowing more young people to qualify by doing away with exclusions on rent limits (the Porta 65-Jovem programme is a young people’s rental incentive whereby part of the rent of a home is paid by the government), and create an Emergency Programme for Student Accommodation to provide 18,000 student beds, as part of the National Accommodation Plan 2025-2026.
As Algarve MP Cristóvão Norte has stressed, housing is “one of the most serious problems that our society faces: very expensive homes, an insufficient rental market, a lack of both public and private options, and poor policies that aggravate these difficulties, of which the last government’s “Mais Habitação” (More Housing programme) is the greatest example.
“What is needed is to return confidence, incentivise the private, cooperative and public sector to place homes on the market. Without this, the problem cannot be resolved”.
Treading diplomatically on Friday, prime minister Luís Montenegro stressed that the last government’s Mais Habitação programme “wasn’t all bad”. It simply needs certain changes – like the removal of the measure for the ‘enforced rental of vacant properties’ – a measure so unpopular it was unlikely ever to be put into practice – the axing of the additional extraordinary contribution tax on Alojamento Local (short term lettings) in certain areas, the delivering back to borough councils the ability to authorise (or not) new licences for Alojamento Local, and the introduction of new ways of fomenting confidence.
These ‘new ways’ include giving ‘tax bonuses’ to companies that construct/renovate residential properties, and changing the law on the use of rural land. By allowing housing projects to move forwards on land previously ‘deemed rural’ – but close to urban settings – the whole dynamic of the market will be given a breath of ‘fresh air’ – at least that is the hope.
So, how has ‘Construir Portugal’ been received? This is perhaps the most frustrating part: as of this week, very little positive has been said, even though the plan will benefit the under-35s in a way that will almost certainly ‘make all the difference’.
In talking about ‘strategic pillars’ of governance, and bold intentions, the government, up until now, has barely mentioned the country’s demographic problem (more elderly than young). Birthrates have not been ‘doing well’ for years – and the ‘window’ for ‘procreation’ is, after all, limited: the sooner the under-35s get help onto the housing ladder, the sooner they will be able to bring new life into the country. In short, lack of housing is holding back so much more than people seem to realise.
Nonetheless, opposition parties wasted no time on Friday reciting all the reasons why they are not enthused by ‘Construir Portugal’. Shortly after them came ANP, the national landlords’ association, complaining that “truly important issues” like the ‘old chestnut’ of old rents, in which tenants who have been living in their homes since 1990 are still paying minute sums, have not been dealt with.
“We still have around 200,000 rents of less than €50,” ANP president António Frias Marques told Lusa, clearly meaning landlords are losing money, if not faith and patience.
Frias Marques also complained that ‘Construir Portugal’ has no clarification on the additional municipal property tax (AIMI) on vacant buildings, nor on homes in urban rehabilitation areas (ARU).
“The whole of Lisbon is considered an urban regeneration area and there, whether it’s a house or a shop, the owner is penalised brutally in terms of IMI. A shop that would have had to pay an IMI of €70, as it has a penalty, will pay €700,” he explained.
“It’s one of those things that it would be good if someone looked at, because Lisbon is full of empty shops, and it’s not because the owner wants them empty, it’s because there really is no one who can afford to rent them.”
The government’s intention, however, is to be open to suggestions.
Presenting ‘Construir Portugal’ last week, the prime minister encouraged feedback, stressing the ‘masterplan’ can be embellished; the only requirement is that it is consolidated over the next 60 days so that the country can finally move forwards and away from the perpetual misery of its housing crisis.
By NATASHA DONN
