PM Costa
Image: @antoniocostapm

New housing policies: “a brake on runaway prices – and could bring them down” – PM

António Costa in interview following last night’s groundbreaking announcements

Portugal’s prime minister António Costa gave an interview to TVI last night following the press conference outlining the government’s recipe for fixing Portugal’s housing crisis.

He stressed that the plan to put more properties on the market “will act as a brake” on the exponential growth of property prices, and “could eventually even have a reductive effect”.

He told the television station that yesterday’s measures come after decades in which there has been “no real public policy on habitation” – hence the issues now so clear, that prompted two separate protests yesterday, highlighting people’s difficulties.

This is “not the moment for the country to be happy”, Mr Costa conceded, albeit the government has already signed 230 local strategies for housing with municipalities, with 1,200 homes already built and another 7,000 underway.

Regarding measures to protect people on mortgages

The PM outlined the commitment that whenever the interest rate rises above the maximum rate tested at the time of contracting the mortgage, the State will finance half that increase.

As he explained, it is a return in a way of the ‘housing subsidy’ that existed 10 years ago. 

Families earning up to €38,600 per year and with a mortgage of up to €200,000 will be entitled to a subsidy of up to €760. The measure applies to contracts concluded after July 2018.

Thegovernment has also proposed the obligation for banks to offer a fixed rate on credits. On this, António Costa clarified that no limit will be set for the fixed rate, but he believes banks will make reasonable offers.

“There is already a bank that is making a reasonable fixed-rate offer and I know that other banks are already preparing it. It’s not a question of common sense, it’s in the commercial interest of the banks, which is not to lose customers,” he said.

Leasehold measures

These involve the State renting properties and then subletting them. The Prime Minister clarified this measure is focused on middle-income brackets; the idea being that homes will be attributed by a form of lottery.

As he explained: “There are many unoccupied houses because landlords often don’t have confidence in the rental market. To counteract this, the State rents and sublets. We pay the landlord the market price and sublet with the rules of affordable rent and allocate the houses by lottery.”

The PM told TVI that he “hopes” this measure will come into force “still this year”, reiterating recent pledges that 26,000 homes for families in need will be built by December 2026.

He also clarified, in relation to unoccupied properties, that the State will not “enter the houses or rent them” without paying the landlord.

“We ask ‘do you want to rent your house, will you rent it to us? The landlord can say no. The State only takes administrative possession if after X-number of years they don’t put the house on the rental market. It’s not legitimate to have empty houses,” he said.

“The State doesn’t steal your house, it rents it, pays you the rent and deducts the value of any building work you have to do,” he explains.

AL (short-term holiday lets) 

The Prime Minister stressed that the mushrooming of AL (short-term holiday lets) has made an “unquestionable contribution” to rehabilitating urban town centres. But the “negative side effects” is that it has contributed to the increase in rents being charged (as well as to a shortage of long-term rental properties).

There are currently around 100,000 AL properties, he outlined. It’s not expected that, even with the tax benefits announced, all these will be transformed into long-term rentals, but “there should be a balance”.

One of the questions being asked today by those who have invested in AL is what will 2030 bring (the moment when current licences will be re-assessed).

But the interview then moved on to the subject of inflation – and the admission by the PM that there are no new specific measures of support in the pipeline: “All social benefits and the minimum wage have risen above inflation,” he said –  while expectations are that inflation will continue to decelerate. The government nonetheless will be “reserving capacity to manoeuvre” in case of extraordinary circumstances.

Teachers: and the question without answer

This is where the interview touched on an issue where the government seems to have little will to manoeuvre: the teachers’ strike, and the impasse particularly over recovering six years, six months and 23 days in which pay and conditions were ‘frozen’.

Mr Costa answered questions with a question of his own: “Is it fair and is there a reason why I can do for a specific career what I cannot do for all the others? (…) The country has to make choices” – if the government gives in to teachers, it will have to give the equivalent of what teachers are demanding to all other public sector workers, which would cost, forever, €1,300 million per year.

“I don’t see that the country has the conditions for that,” said the PM.

Source: SIC noticias