Housing policy furore: government’s 16-point plan roundly attacked

Investors, property sector lead uproar

Flanked by his 34-year-old housing minister, Marina Gonçalves, and his ‘right hand’, finance minister Fernando Medina, António Costa held a press conference last Thursday evening outlining what was presented as the government’s plan to fix Portugal’s housing crisis.

“No one can ignore how much the housing market has been impacted by the increase in interest rates and in rents practised. For this reason, the Council of Ministers has today approved the ‘Mais Habitação’ (More Housing) programme in which we have tried to act in all dimensions of the housing problem,” he told his audience.

And then the first concerted intervention on housing for decades was rolled out in the form of a PowerPoint presentation with very little in terms of explanations to back it up.

Before outlining the various measures, it should be said that President Marcelo Rebelo de Sousa has likened the government’s package to a melon – explaining no-one ever knows how good a melon is until it has been opened.

“Looking at the package of measures, which is very large, it is not possible to have a clear idea of what is inside. Yesterday, the melon was presented,” he mused, “now you have to open the melon and look at each law and see what each one of them says”.

In the president’s mindset, what is lacking is an understanding of how much each measure will be costing the State, how many families will benefit, what the effects of those measures will be, and how long each one will take to produce effects.

None of these questions were answered in last Thursday’s press conference – albeit the prime minister said the global package would cost the government €900 million – thus the galloping furore that has followed.

Prime minister António Costa announcing the measures included in the ‘More Housing’ programme last Thursday
Prime minister António Costa announcing the measures included in the ‘More Housing’ programme last Thursday

So, first to the various measures: they were listed under five major objectives:

  • Increasing the number of properties available for housing
  • Simplifying licensing procedures
  • Increasing number of properties within rental market
  • Combatting speculation
  • Protecting families

Taking these from the top, in order to increase the number of properties available for housing, the solutions are described as:

  • Converting the use of commercial property or services property to housing
  • Making available for leasehold, for housing purposes, properties owned by the State (and there are literally thousands throughout the country).

For simplifying licensing processes, the plan involves:

  • Making architects/engineers responsible for licensing (i.e., cutting out councils’ role)
  • Applying “late payment interest for non-compliance with licensing deadlines”. A measure of responsibility which, warned Mr Costa, “will be accompanied by a very tough sanctioning framework”.

For increasing the number of properties available on the rental market, the presentation lists:

  • Reinforcing landlord confidence.
  • State renting (properties) to sublet.
  • State guaranteeing the payment of rents in arrears (if tenants fail to pay rent due after three months), either by covering the amount in full (if tenants qualify for this level of help), by paying a part of the outstanding rents, or by overseeing eviction.
  • Removing taxes payable if landlords sell properties for the housing market to the State.
  • Financing municipalities for coercive building works (this being one of the hottest points of contention: the idea being municipalities will be able to earmark vacant properties, ask landlords to rent to them for the purposes of subletting, and coercively do so if the answer is ‘no’).
  • Mandatory renting of vacant properties (this proposal dovetailing with the proposal above).
  • Encouraging owners operating AL (alojamento local/short-term holiday rentals) to transfer to the long-term market, with the ‘carrot’ being no IRS tax on income until 2030 – and the ‘stick’ being a new levy if they opt to remain in the short-term sector. The nuts and bolts of the AL measure includes not allowing any new AL licences, unless in rural areas of the interior where they will help the local economy – and reviewing all licences in 2030, and every five years thereafter. There is also believed to be a stipulation that if condominiums oppose an AL in operation within them, they too can force the practice to stop.


Combatting speculation involves:

  • Removing the habitation component from the long-running golden visa regime (something that has been presented as an end to the regime entirely, which is almost certainly not the case. The sting in the tail of this measure, however, is that any property owners who have golden visas will only be able to renew them, when their validity comes up, if they live in them themselves (or a close family member lives in them) or if they rent them out on the long-term market.
  • Guaranteeing a just rent in all new rental contracts (again, no explanations at this point how this will work).

Finally, protecting families, sees proposals to:

  • Exclude capital gains levies on the repayment of mortgages (personal and for one’s descendants).
  • Oblige banks to offer fixed-rate mortgages, to protect against any increases in interest rates.
  • Support families in difficulty with up to €200 per month ‘in certain cases’.

Ignoring for one moment the contention these measures have generated, there are – critics accept – some “very good ideas” in the package: converting the use of commercial property or services to housing, for example, and finally addressing the scandal of the State/municipalities having sat on thousands of perfectly usable properties, in many cases for decades.

Other potential positives are the waiving of taxes for property owners seeking to sell to the State; even the offer of tax exemption if certain AL owners do indeed want to get out of the regime (the regime has its own drawbacks: if owners seek to sell, having operated AL, they are liable to 45% tax on profits and can only sidestep these if they have left the regime three years’ previously).

Rental support for families in difficulty, and guaranteeing rents in arrears, are all seen as positives, albeit for a very small section of society.

In other words, certain elements of the package have worth, but then there are aspects that crash down like an ideological sledgehammer on the notion of a free market/private enterprise – the “mandatory renting of vacant properties” being the measure that has elicited the greatest howls of indignation from national citizens, as it is seen as an almost communist intervention. Political commentator Luís Marques Mendes said on his regular Sunday slot, it is not even the kind of proposal one would expect from a moderate Socialist like António Costa.

Could the PM simply have been persuaded to accept this measure because his personal ambition these days is much more focused on Europe?

According to former Socialist MEP Ana Gomes, 2024 could bring elections “and I am not just referring to the European elections…”.

Answers to all current questions are unclear. On the face of it, the government’s ‘Mais Habitação’ programme will now undergo ‘public discussion’ (for that read ‘concerted attack from all sides’). There is to be a debate in parliament also before a final definitive package of measures is approved by the Council of Ministers scheduled for March 16.

Also read: Algarve tourism property owners push back against housing package


By Natasha Donn
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