Government unveils measures to bolster housing market

Government unveils measures to bolster housing market

20th February 2023

One of the proposals is the end of new golden visas for habitation purposes.

Prime Minister António Costa announced this afternoon a series of measures designed to tackle Portugal’s housing crisis and combat property speculation, including the end of the granting of new golden visas for habitation purposes.

The PM clarified that existing golden visas will only be renewed if golden visa holders’ properties are for their own use or are due to be placed on the long-term rental market.

Whether the golden visa scheme will remain in place for other forms of business has yet to be explained. The PM only referred to the housing aspect of the golden visas.

These changes and the long list of other measures announced as part of a new government programme dubbed ‘More Housing’ (Mais Habitação) will still be subject to a 30-day public scrutiny period before being re-evaluated by the government, Costa told reporters, adding that a new Council of Ministers to discuss these proposals has been scheduled for March 16.

To help increase the number of properties available for housing, the government plans to allow properties classified as for commercial uses or services to be used for housing.

António Costa also revealed plans to “simplify licencing procedures” and “increase the number of houses on the rental market”.

One of the measures announced aims to protect tenants from being evicted. In cases where tenants go three months without paying their rent, the State will immediately step in and pay the amount owed to the landlord. The tenant’s social and financial situation will then be analysed to establish if an eviction is in order or if the tenant’s justification for not paying – due to a loss of income or many other reasons – is considered valid.

The PM also announced that homeowners in Portugal who sell their houses to the state or to local authorities will benefit from a capital gains tax exemption. Costa said the government hopes this will act as a “strong incentive” for people who own homes they do not intend on using.

Major changes are also in store for the country’s Alojamento Local (AL) short-term rentals market. A ban on the issuing of new licences for short-term rentals in the country has been proposed, with the exception of rural accommodation in inland municipalities, where the AL regime could have a key role in boosting the local economy.

António Costa also announced that current short-term AL rental licences “will be subject to reassessment in 2030″ and, after that, periodically, every five years.

The measure, he said, is part of a new set of rules offering a “strong incentive to return to the housing market housing units that are currently dedicated to short-term rentals.”

The government is also setting a price ceiling on new residential rent contracts.

“For new contracts, the new rent must result from the sum of the last rent practised with the updates that could have been made during the contract period,” the PM explained.

Besides these two factors, the new price may also take into account the 2% target for inflation defined by the European Central Bank (ECB), he added.

The government’s new programme also foresees that banks in Portugal will have to offer fixed-rate mortgages as part of the options for prospective borrowers.

“All banks must offer fixed-rate loans in their portfolio, in housing loans,” he said, stressing that, with this measure, it will no longer be possible, as is currently the case, for financial institutions not to provide such deals.

The measures are still being explained by Prime Minister António Costa, Finance Minister Fernando Medina and Housing Minister Marina Gonçalves at the time of writing – more updates to follow.

(Update 18:15) Credit line for councils to carry out work on vacant residential properties

The government also announced a new line of credit for municipalities to be able to undertake work on vacant residential properties.

The measure earmarks €150 million to finance the credit line to municipalities to carry out “works on vacant houses with low habitability conditions”, the prime minister, António Costa, announced.

(Update 18:32) Licensing by councils

Construction projects are in future to be licensed by councils on the basis of a statement of responsibility from the architects and engineers involved, said the PM, and that public entities will be penalised if there are delays in issuing rulings on applications.

He explained that construction and specialty projects “are no longer subject to municipal licensing” and that councils must issue a licence based on “the term of responsibility signed by architects and engineers” of the projects.

“This responsibility will be accompanied by a tough sanctioning framework, to be applied by the Order of Engineers and the Order of Architects, to all designers who violate the ‘artis legis’ or ‘legis artis’ or who [violate] the construction standards themselves,” he said.

Municipal licensing will in future thus be limited to an urban planning assessment: whether or not construction is permitted on the plot and in respect of standards and other planning requirements, wrote Lusa news agency.

“We are certain that we will significantly speed up housing licensing processes, without sacrificing the technical requirement that imposes on each of the designers,” he said.

(Update 18:40) Housing package €900m cost to come from state budget – minister

The measures contained in the ‘More Housing’ programme approved by Portugal’s government on Thursday are to cost about €900 million, to come out of the state budget, according to the minister of finance, Fernando Medina.

“The estimated value of the programme we are presenting today is around €900 million, not including in this estimate what may be costs with rents, with works to be carried out or with purchases, and including here the value of credit lines,” he announced at the press conference.

The prime minister specified that the funds in question would be “found from within the state budget”, ruling out the idea that some of the money could come from the Recovery and Resilience Plan (RRP), through which Portugal is spending post-pandemic recovery funds from the European Union, wrote Lusa news agency.

The money from the RRP is not a kind of current account that you go there to get (money) every time you need it,” he said. “This idea that ‘if there’s a problem, you go and get it from the RRP’ is not right. That is not a current account, nor is it our parents’ allowance.”

By Michael Bruxo

Source: Lusa

Source - Portugal Resident