The final texts of two key bills in the government’s housing package were approved in parliament last week, following a vote in which the minority government secured support from Iniciativa Liberal, PSD, CDS-PP, and IL.
The bills, which include legislative authorisations, focus on tax relief measures aimed at boosting housing supply and changes to licensing, urbanisation, and urban regeneration policies.
The tax relief bill received opposition from the PS Socialists, LIVRE, PCP communists, and Bloco de Esquerda (BE), while CHEGA, PAN, and JPP abstained. Similarly, the proposal to revise the licensing regime and amend the legal frameworks for urban operations and regeneration was opposed by PCP, BE, PAN, and LIVRE, with CHEGA, PS, and JPP abstaining.
A bill presented by the PS, aimed at strengthening access to permanent housing and combating property speculation, was rejected at its first reading.
One of the approved legislative authorisations gives the government the power to amend various tax laws, including the VAT Law, IRS Law, Tax Benefits Statute, and IMT Law, to encourage the supply of housing.
Planned measures include:
• A reduction in income tax from 25% to 10% for landlords renting properties at “moderate prices” (though “moderate” is defined as €2,300 per month, more than double the average wage).
• The exclusion of capital gains tax on residential property sales when proceeds are reinvested in rental properties.
• An increase in the limit for rent deductions on personal income tax to €1,000 per month.
• A 7.5% IMT rate for nonresidents purchasing housing.
The government also approved a reduction in VAT to 6% on the construction of properties intended for sale or rent as primary or permanent housing. The reduced VAT applies only to projects that meet “moderate housing price” criteria.
However, this measure has been revised, with an amendment introduced by the ruling parties (PSD and CDS-PP) to restrict the tax break to properties used as the purchaser’s permanent residence for a minimum of 12 months, or face a 10-percentage-point increase in IMT.
In addition, the government has been granted the authority to amend the legal regimes for urbanisation, construction, and urban regeneration. The aim is to streamline urban planning processes in response to the housing crisis. The law introduces shorter deadlines and allows most urban planning operations to proceed with prior notification, bypassing administrative delays.
Consultation with relevant entities will be streamlined to prevent bottlenecks.
Meanwhile, the PS’s rejected bill proposed measures such as tax exemptions for second homes placed on the market for sale or rent and higher taxes on property speculation in areas under high urban pressure.
The housing package, which carries an estimated cost of between €200 and €300 million, is expected to remain in place until the end of the current legislature in 2029.
