Press Conference of the Council of Ministers of February 16, 2023 - More Housing

The Council of Ministers approved a set of «measures that seek to fully respond to all dimensions of the housing problem», said Prime Minister António Costa at the press conference of the Council of Ministers, which was also attended by the Ministers of Finance , Fernando Medina, and Housing, Marina Gonçalves.

The Council of Ministers was dedicated exclusively to the issue of housing, and the approved measures «will be put up for public discussion for about a month so that, in the end, they can be definitively approved, some by the Government, others through a bill to the Assembly of the Republic, at the Council of Ministers on March 16", said António Costa.

The Prime Minister stated that «housing is a central and cross-cutting concern of Portuguese society because it concerns all families and not just the most needy», but also «young people and middle-class families». “Through the Mais Habitação program, approved today, we seek to act in all dimensions of the problem”, he added.

António Costa pointed out five axes of problems and solutions.

Increase housing supply

Firstly, to increase the supply of housing properties, of which he highlighted that, without changing the land use plan or license for use, classified land or properties licensed for trade or services can be used for the construction of, or reconverted for housing.

Still to increase the supply of housing properties, the State will make land or buildings available for cooperatives or the private sector to build affordable housing, referring to “two tenders dedicated to model construction that significantly shortens construction times and increases energy efficiency”.

Simplify licensing

Second, simplify licensing processes, of which he highlighted two types of measures.

One, «very innovative, is that architectural and specialty projects are no longer subject to municipal licensing, and there is now a term of responsibility for the designers, with municipal licensing limited to urban requirements».

On the other hand, «we determine that there is an effective financial penalty for public entities when they do not respect the deadlines set forth in the law for issuing opinions or decision-making, starting to incur default interest for the benefit of the promoter», the State deducting, «in the Budget of the year following the one causing the delay» to the entity that was late.

Largest rental market

Third, more houses on the rental market, having highlighted the need to reinforce the confidence of landlords so that they place vacant houses on the market through two measures, the first of which is that the State proposes to rent all available houses for five years as long as you can sublet.

Another measure is to "introduce an amendment, in relation to contracts that already exist or that are established between landlords and tenants, so that, in all eviction requests that are filed at the National Lease Desk after three months of non-compliance, the State passes to take the place of the tenant in paying and the landlord in collecting the debt, checking whether there is a socially acceptable cause and resolving it, or evicting him».

In order to increase the public supply of housing for affordable rent, «a principle of exemption from capital gains tax is established for those who sell to the State, including municipalities, any type of housing», encouraging those who have houses that they do not intend to use to sell, so that the number of housing to be placed in affordable rent can be increased.

Also to expand the rental market, «a credit line of 150 million euros is created to finance coercive works by municipalities, which the law allows but municipalities rarely do due to financial difficulties».

A «strong incentive is created for units that are dedicated to local accommodation to return to the housing market» through various measures.

Thus, the current licenses will be reassessed in 2030, and thereafter there will be periodic reassessments; the issuance of new licenses will be prohibited, with the exception of rural accommodation in interior municipalities where there is no urban pressure and where they can contribute to the economic dynamism of the territory; owners who transfer fires from local accommodation to rental housing by the end of 2024 will have a zero rate on the IRS until 2030; an extraordinary contribution to local housing will be created to finance housing policies.

Tax incentives are reinforced for affordable renting, without payment of IMT on the acquisition of affordable rental homes. Those who carry out rehabilitation works in these houses will pay VAT at the rate of 6%, and will be completely exempt from IRS on property income.

Tax incentives for all leases are improved, lowering the rate from 28% to 25%.

Incentives for stability in lease contracts are reinforced: if the contract is between 5 and 10 years, the 23% rate will increase to 15%; if it is between 10 and 20 years, the rate of 14% will drop to 10%; and if it is more than 20 years, it will drop from 10% to 5%.

fight speculation

Fourth, combating real estate speculation, two measures were highlighted. One, the end of granting new Golden Visas, «the existing ones being renewed, if they are real estate investments, only for own and permanent housing or if it is placed on the rental market for a long time».

Another, in order to regulate rents on the market, the State will start to limit the growth of rents in new contracts, which must «result from the sum of the rent practiced with the annual updates and the value of the increase in inflation set by the European Central Bank».

support families

Fifth, measures to support families both in the lease contract and in home loans.

To help reduce household indebtedness, «exemption from capital gains tax on the sale of a house is allowed to amortize the mortgage loan of the owner or a descendant».

It is determined that all financial institutions that practice real estate credit must offer credit at a fixed rate.

Support is created for credits of up to 200 thousand euros from families taxed up to the 6th step of the IRS, the State subsidizing interest by 50% of the amount above the maximum amount to which the family was subject in the stress test it did when took out the credit.

In the value of the lease contracts already in force, it is attributed to households that have income up to the 6th step of the IRS inclusive and an effort rate greater than 35% and a house rent within the limits set by the IHRU for the respective council, a State subsidy up to a maximum limit of 200 euros per month for rents.

New generation of housing policies

António Costa recalled that «in 2016 we defined the launch of a new generation of housing policies as a priority. We started with the foundations – by drawing up a national strategy and approving a basic law – and we built a policy the likes of which the country had not had since the beginning of the century».

The national strategy «has already led to 230 local housing strategies for municipalities». The measures of the Porta 65 program, for young people to lease, support 16,500 families and with the new rules, this number will be expanded.

Within the scope of the PRR, «we defined 2.700 million euros to increase the public housing offer. 1,200 homes have been completed, 11,900 are in the design or construction phase and we have a timetable for 26,000 new homes for public housing offers,” he said.

Source: Government of Portugal