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The Housing Measures for Portugal 2023

The prime minister of Portugal has announced new measures for the country in light of the national crisis in housing. These range from putting more houses on the market to rent to reducing average prices and helping low-income families.

Following the announcement, there was a month long period of public discussion where many people and institutions were heard. This resulted in some changes being made to the program, which was closed earlier in the week and officially approved yesterday (March 30th) by the Council of Ministers. 

The bill is now going to be presented in the Parliament and passed, since there’s an absolute majority; however, there’s room for discussion with the other parties. Therefore, some changes can still be made. It will then proceed to the President of the Republic to be officially approved and legally put in action. 

Check out all the measures plus the announced alterations below!

Frederik Pohl
Frederik Pohl, CEO
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Ban on new Alojamento Local (AL) licenses

The proposed bills concerning Alojamento Local were some of the most disputed and, in result of that, some changes were made. New AL licenses will now only be banned in very high density municipalities, that are located mostly in the coastline and in the Algarve. Meaning that low density municipalities (such as in the interior) and the autonomous regions (Madeira and Açores) are excluded.

If owners of existing ALs put them on the rental market they will be exempt from taxation on property income (IRS) and property tax (IMI) earned until 2030. If they choose to continue as Alojamento Local, they will have to pay an extraordinary levy to the IHRU – that has been decreased from 35% to 20%.

It has also been clarified that these measures only apply to AL apartments and individual units. 

Compulsory leasing of vacant houses

The State may compulsorily rent vacant houses through leasing by public entities – with the respective payment of rent – for subsequent sublease to the population. Owners who sell houses to the State or their respective municipalities will also benefit from tax exemption on capital gains. It has now been clarified that this measure only applies to apartments.

What counts as a vacant house?

The law considers a vacant house (“casa devoluta”) a residential property located in an urban center that has been unoccupied for more than a year. Signs of an unoccupied property are, for example, the inexistence of contracts with water, gas, and electricity supply companies. If utilities are contracted but the consumption is lower than the given thresholds (water 7 m³, electricity 35kwh), the property is also considered vacant.

After much public discourse, it has been cleared out that this will only apply to apartments that have been vacant for more than two years.

Still, some exceptions are:

  • Private vacation units;
  • Properties being rehabilitated;
  • Portuguese emigrants’ homes;
  • Property acquired for resale by individuals or legal entities (only if they haven’t benefited from IMT exemption during the period of three years from the date of acquisition);
  • If it is integrated in a tourist resort or registered as a local accommodation establishment (AL);

The end of the Golden Visa program

The Government won’t grant new Golden Visas – this is final. Additionally, the renewal of current visas (which occurs every two years) will only happen if the property is registered as the owner’s official residence or if it is being rented (on a leasing contract of no less than 5 years).

Golden Visa processes started after February 16th will be transferred to the regime of residence permit for entrepreneurial immigrants. 

Changes to the other immigration programs (D7, D3, or Digital Nomad Visa) were not addressed, but if some of the measures mentioned above are approved, it’s necessary to make a formal amendment to the law in force and this could lead to a new wording with impact also in the so-called standard residence permits.

housing measures 2023 portugal

The state pays interest increase on loans up to 200.000€

This measure applies solely to mortgages of up to 200.000€, contracted after July 2018, in which the increase in the interest rate is three percentage points higher than the rate initially used. The subsidy will be 50% of the amount that is above the three percentage point increase in the interest rate.

Increasing the number of houses available for rent

There’s a proposition for landlords to rent their available houses to the government for a period of five years. The State will then sublease these same houses to tenants – basically committing to always paying the rent to landlords. On the other hand, when special eviction procedures are filed with the National Housing Agency (BNA) after three months of rent default, the State will substitute itself for the tenant in paying the rent, assuming the role of the landlord to collect the amounts owed.

Aid for low-income families

The government is proposing a direct aid of up to 200€/month for families with an effort rate of more than 35% when the rent is within the maximum prices set by the IHRU (Property Institute and the Urban Rehabilitation) for each municipality. This applies to all households up to the sixth bracket of the IRS (see tables here).

Curbing price speculation in rents

New leasing contracts will be subject to a price cap, which will be set according to inflation in previous years, as well as the European Central Bank’s medium-term inflation target. The limits will only apply to homes that have been on the market for the past five years, though. For new ones, there will be no price cap. 

Banks are required to offer fixed rates

All banks will be required to offer a fixed-rate option (specific interest rate for the entire term of the loan) in mortgage contracts.

housing measures 2023 portugal

Fiscal incentives for affordable renting (PAA program)

  • Total exemption of VAT rate on construction/rehabilitation works destined for the Affordable Rent Program (PAA)
  • IMI (Property Tax) and AIMI exemption for three years after rehabilitation
  • IMT (Property Transfer Tax) and Stamp Duty exemption 
  • Total exemption from the payment of IRS on income derived from leases on the Affordable Rent Program

Reduction of IRS rate for long-term rental contracts

  • Leases of up to five years – 25% rate
  • Between five and ten years – 15% rate
  • From 10 to 20 years – 10% rate
  • More than 20 years – 5% rate

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