President Marcelo
President Marcelo will have to use his powers of persuasion and diplomacy to broker a truce in this long-running dispute. Image: Tiago Petinga/ Lusa

Marcelo refuses to green light government’s controversial ‘housing programme’

Says “it is not easy to see” how it will help struggling citizens “quickly and effectively”

President Marcelo has delivered his long-awaited decision on the PS Socialist government’s blueprint to fix Portugal’s housing crisis…. and it is neither one thing nor the other.

Marcelo has not ‘vetoed’ the document that has caused so much angry debate… he has simply refused to give it the green light – giving a list of reasons that suggest he has thought the situation out a great deal more than the minister for housing, Marina Gonçalves – at 34 the youngest minister in the history of Portuguese democracy.

Uploading his reasoning, ostensibly sent to prime minister António Costa before the president left for his two-day official visit to Poland, he begins:

  1. The emergence of the housing crisis, which especially affects young people and more vulnerable families, but is beginning to reach the middle classes, as well as the need to increase the supply of housing properties, led the Government, six months ago, to announce an ambitious More Housing Programme, shortly after recreating a Ministry for Housing.

This Programme included significant administrative simplification measures, included in another diploma of the Assembly of the Republic, which I have just promulgated.

But, above all, it appeared, in the eyes of the Portuguese, centered on five very strong ideas:

1º – The forced leasing of vacant private houses, increasing the housing supply;

2º – Limitation to Alojamento Local (short-term lettings), thereby also allowing an increase in the offer of affordable rentals;

3º – Reinforcement of the role of the State in offering more houses, by itself and in collaboration with cooperatives, extending the aforementioned accessible lease;

4º – Provision of public incentives to private ones to increase the intended offer;

5º – Transitional measures, including limitations on rising rents, during the start-up and consolidation period of the Programme.

Everything was aimed at introducing a quick shock to the housing market, which would respond to the emergency, be visible by 2026 – the end of the legislature – and allow for a stop of the vertiginous rise in the cost of housing, while it was (also) expected that interest on real estate credit, which involves one million, two hundred thousand contracts, would stop its asphyxiating climb.

  1. The presentation of the Mais Habitação Program ended up polarizing the debate around two central themes – forced renting and alojamento local. The effects were immediate:

1º – It erased other proposals and measures and made a desirable regime agreement on housing very difficult, outside and inside parliament

2º – It gave a reason – fair or unfair – for perplexity and waiting time for some private investment, without which any global solution is insufficient.

3º – It radicalized positions in Parliament, leaving the absolute majority practically isolated, attacked, on the one hand, in a proclamatory style, for being unrealistic and, potentially, unconstitutional, for leaning excessively on private initiative, and, on the other, of insufficiency and timidity in State intervention.

As early as March 9, I gave my opinion on the risks of an overly optimistic speech, of high expectations for the deadline, the means and the administrative machinery available and, therefore, of possible unrealism in the projected results.

  1. Six months later, the present diploma unfortunately confirms these risks.

1º – Except in a limited way, and with European funds, the State will not assume direct responsibility in the construction of housing.

2º – The support given to cooperatives or the use of vacant public buildings, or private buildings acquired or contracted for affordable rent, implies slow bureaucracy and the use of entities overwhelmed with other tasks, such as the Banco de Fomento, or without means up to the required level, such as the IHRU.

3º – Forced leasing becomes so limited and time-consuming that it appears merely symbolic, with a political cost greater than any tangible social benefit.

4º – The equal complexity of the alojamento local regime makes it doubtful that it will quickly achieve the intended effects.

5º – The present law, even in spite of the corrections in forced leasing and alojamento local, makes it difficult to recover any confidence lost on the part of private investment, given that the public and social investment, foreseen therein, is contained and slow.

6º – There are no new measures in sight, with immediate effect, in response to the suffocation faced by many families in the face of the weight of increases in interest rates and, in countless situations, in rents.

7º – Regime agreement does not exist and, without a change in course, perhaps it will not exist until 2026.

  1. In simple terms, it is not easy to see where the promised housing supply will come from effectively and quickly.

It is an example of how a bad start in response to a need that time has made dramatic, crucial and very urgent can mark it negatively.

With no obvious political recovery in the short term likely, despite the work put into joining several laws into one and certain positive ideas, (this law is) diluted by the essence of solutions found.

That is, all in all, neither in forced leasing, nor in alojamento local, nor in the involvement of the State, nor in its support for cooperatives, nor in the concrete means and deadlines for action, nor in the total absence of a regime agreement or minimum consensus party, is the present diploma sufficiently credible in terms of its short-term execution, and, therefore, mobilizing for the challenge to be faced by all its essential protagonists – public, private, social, and, above all, Portuguese in general.

I know – and we all know – that the absolute majority in parliament can repeat, in a few weeks time, the approval just voted (here the president means that the PS government has the power to reapprove exactly the same programme, and get away with it).

But, as will be understood, this is not what can or should prevent the expression of a profound negative conviction and serene analytical judgment.

In these terms, I return, without promulgation, Decree n.º 81/XV, which approves measures in the field of housing, making several legislative changes.

President of the Republic, Marcelo Rebelo de Sousa.

It now remains for the government and the various lobbies (real estate/ tourism etc)  to react – which may not be quick in the case of the former, as MPs are all still on holiday. Lobbies, however, will be almost certain to be ‘over the moon’ with delight/ relief and a sense that balance is being wrestled back into this complicated picture. 

President Marcelo has always been wary of the government’s ‘housing fix’, suggesting it was much like a melon… “you will never know how good it is until you open it”.

What his letter, published today as he is many miles away in Poland shows is that this seasoned political mind has opened the melon, and is not in the least bit impressed.

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