Updated: August 9, 2024
The new Portuguese government that took office on 2 April 2024 has recently presented major changes to the measures put in place by the previous government on housing policy and highlighted key areas of interest that will have significant impact on the housing market, focused on responding to the housing crisis in the country while continuing to foster international investment into the country.
Reversal of Mais Habitação Measures
To ease the pressure on the housing market in Portugal, where demand is severely outpacing supply, the previous government implemented a series of measures under the so-called Mais Habitação (More Housing) Bill.
In addition to ending the real estate investment pathway as an option to secure a Portuguese Golden Visa, the Bill included a ban on new Alojamento Local (AL) licenses being issued in key areas in Portugal – a license that is required for a property to become a short –term rental establishment.
The new government has proposed that key Mais Habitação measures will be revoked, for example giving municipalities autonomy in establishing regulations, allowing licenses to be transferred along with the purchase of property, and reversing the increased taxes on short-term rentals.
You can find out about the latest changes in our article: What is Changing Regarding Portugal’s Short-Term Rentals?
Four Key Measures Proposed by the New Portuguese Government
The Portuguese government, led by Prime Minister Luís Montenegro, has highlighted four key measures to protect against the current housing crisis in Portugal, alongside the aforementioned alterations to the Mais Habitação measures.
Boost housing supply
High up on the agenda for Montenegro’s government seems to be increasing the housing supply to address the imbalance between demand and supply, where demand has been outpacing supply over the past years.
Executives in the government have stated that this can be done through:
- Private investment, encouraged via fiscal incentives
- Public investment, through new construction or the mobilization of existing stock
- Cooperative efforts by forming partnerships between the government and private enterprises
Specific measures that have been proposed include:
- Relaxing restrictions on land use, construction requirements, and urban density
- Introducing vacant and underutilizing public buildings and land into the housing market
- Reducing or eliminating tax costs on construction or renovation of properties intended for permanent residence
- Implement a large-scale construction and rehabilitation program for general and student housing
- Promoting innovative housing concepts, such as build-to-rent, modular housing, and co-living options
- Facilitating affordable “agricultural housing” in rural and interior areas
- Improving public transportation networks around cities
Stabilize the rental market
The new government has mentioned that it plans on evaluating the renting measures that have been introduced in the past, particularly those that relate to duration and renewals, while also analyzing the rent insurance mechanism that is currently in place. In addition to this, the government seeks to speed up the process of resolving disputes in the event of non-compliance with rental contracts.
The thought process behind these measures is to provide stability to the rental market in Portugal.
Making it easier for first-time property buyers under the age of 35
The Portuguese government has proposed a new law to help young first-time home buyers by eliminating the need to pay Property Transfer Tax and Stamp Duty, two taxes needed to buy property in Portugal.
This measure is aimed at addressing the housing affordability crisis and encouraging young people to stay in Portugal instead of emigrating. Additionally, the proposal includes a public guarantee for 100 percent housing loans to help young buyers secure financing without needing a down payment. If approved, this initiative will significantly reduce the financial barriers for those under 35 looking to purchase their first home in Portugal.
You can find out more about the new law proposal in our article, New Law Proposal Making it Easier for Young Buyers to Secure their First Home in Portugal.
Help for “vulnerable tenants”
The government has also expressed its desire to provide assistance to “vulnerable” tenants, replacing price limitations with public subsidies for tenants in vulnerable or need-based situations. Alongside this, they aim to provide dynamic rent assistance to support families with high effort rates until the rental market stabilizes.
New Governmental Changes Seek to Stabilize the Portuguese Real Estate Market
The new government’s strategy regarding housing in Portugal looks set to target specific areas that need improvement, none less so than boosting the supply and availability of housing.
This also falls nicely into the hands of investors and foreign buyers seeking to capitalize on the Portuguese real estate market, with the proposed reversal to key aspects of the Mais Habitação program, in particular, a massive plus for investors looking to invest in property to rent out short-term rentals, alongside incentives to stabilize the rental market.
Want to learn more about investing in Portugal’s real estate market? Find out more in our ultimate guide.
