Perfect housing storm: Government accused of politicising housing, without solving crisis

Government’s final policies ‘please no-one’; face “massive recourse to courts”

Portugal’s absolute majority government presented its ‘final draft’ of the ‘Mais Habitação’ (More Housing) plan – devised to fix the country’s housing crisis – against a noisy backdrop of whistles, drum rolls and chants. These did not signify any form of jubilation. If anything, the Socialist executive has managed to come up with a plan that pleases no-one.

From young to old, the poorly paid, the better paid to wealthy foreign investors, the sense of outrage and frustration is palpable.

This divisive set of measures (see below) will now go for discussion in parliament – the idea being that after being approved in the Assembly of the Republic, President Marcelo Rebelo de Sousa will give them his ‘rubber stamp’.

But whether this actually transpires is another question.

Constitutionalists have joined the throng of detractors, suggesting various parts of the policy are not only unconstitutional but illegal. Mayors in certain boroughs have already said they will not be adopting the more controversial measures, namely coercive leasing – and investors’ groups and the real estate sector have warned of the likelihood of a ‘massive recourse to the courts’ over the scrapping of golden visas.

Considering President Marcelo has shown he too is far from supportive of the measures affecting private enterprise, the whole plan – in spite of the government’s ‘absolute majority’ – looks on deeply dodgy ground.

First, to the ‘final’ measures:

  • State-owned land or buildings are to be offered up to private developers for the development of affordable housing projects.
  • Taxes on rentals are to decrease from 28% to 25% and “progressively over the years”.
  • End of golden visas: Existing golden visas will be converted into normal residency permits. New requests will be evaluated according to existing laws.
  • Alojamento Local (AL, short-term holiday rentals) restrictions will apply to apartments in “high density municipalities” (essentially meaning coastal boroughs, Lisbon/Porto). Local councils will manage AL licensing “by assessing the need for accessible housing within the municipality”.
  • “Coercive leasing” to apply to apartments, which have been considered “derelict” for at least two years. The idea here being that after two years of being left unused, local councils will offer owners a rental proposal that is “30% above the average price in that parish”. If the owner refuses or fails to respond, the council will move forwards with “coercive leasing”.
  • Rural buildings that aren’t being used are to be charged IMI municipal property tax as if they were “urban properties”.
  • Government housing support portal Porta 65 Jovem will be open to applications in an attempt to help the “emancipation of young adults”.
  • A new programme entitled Porta 65 + has also been created to help families who have been affected by a reduction of income or for single parents.

Expressing ‘perplexity’ at the anger generated by the plan for coercive leasing, the PM did concede that if some of his executive’s measures are considered unconstitutional, “we will respect the decision”.

The constitutionality of the government’s proposals will almost certainly be determined in due course, but, meantime, tens of thousands of citizens – from those in ‘situations of need’, to many more in full employment but without the ability to secure a roof over their heads – took to the streets of six cities on Saturday to demand a great deal more than the measures that were presented in a way that smacked of having been designed to take people’s attentions from the essential.

AL (short-term rentals) changes only apply to municipalities in white
AL (short-term rentals) changes only apply to municipalities in white

The essential is that the majority of people in Portugal today cannot afford to buy their own home, or even to rent.

But by creating a ‘furore’ in the private sector – by putting new controls on people’s freedoms to rent in any way they would like; by summarily wiping out an investment programme (ARI/golden visas) without giving applications in the system any notice, the government has managed to focus attentions on ‘constitutionality’ and ‘legality’.

The noise in the press is not so much on the fact that in seven years of Socialism, social housing projects have been shamefully ignored – but that if it wasn’t for Portugal being so popular with foreign investors, national citizens would not be so badly off.

It is a narrative that potentially creates division and resentment, when the reality is that there would not be a housing crisis if the government had adopted a housing policy when it took office in 2015 – instead now, and on the back of the billions of euros flooding in from Brussels thanks to the post-Covid recovery and resilience plan (RRP).

Thus, Thursday’s hugely embarrassing announcement in Setúbal (in that the PM/finance minister’s voices were drowned out by the strength of angry protests going on outside) may simply have served as a form of theatre.

It will be down to President Marcelo to attempt to restore ‘calm’, while lawyers are already being hired to challenge the assault on the golden visa investment regime which, for all the political demonisation (PM Costa said on Thursday “nothing justifies the special treatment” enshrined by the scheme), has brought the country billions of euros of investment.

Yes, the real estate sector has benefited enormously from house purchases on the back of golden visas, and yes, the price of property in Portugal has inflated since they came into effect. But property is inflating throughout Europe, and these are homes that would never be within the reach of everyday working people.

That is the nub of this crisis: had the government been pursuing a social housing programme at the same time as attracting foreign investment, there would not be protests in the streets. There would not be people living in tents in corners of the capital – and there would not be ‘outraged’ groups of investors threatening Class Actions.

Almost ‘adding insult to injury’, the prime minister on Tuesday said that regulation of the AL rentals market would allow the government to “double the number of homes available for university students by 2026”. It rang like another piece of expedient theatre: PS Socialists have been promising to increase student accommodation since 2018 (without having done so), howled the Opposition.

The PM uses “trickery and deception” to promise things for the “thousandth time”, railed Alexandre Poço of PSD social democrats who will be attacking ‘Mais Habitação’ with all their might when it finally makes it to the troubled aisles of parliament.

And with all this going on, very little has been said about the horrendous increases in people’s mortgages as a result of inflation.

With around 30% facing increases of up to €300 a month, Portugal’s housing ‘crisis’ shows no sign of being solved any day soon.

By Natasha Donn & Michael Bruxo
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