Housing has occupied the center of political and social debate in Portugal, and with good reason. The problem is real, urgent and transversal: young people who are unable to leave their parents’ home, families who cannot find rent at affordable prices, cities that are becoming progressively inaccessible to the Portuguese middle class. The Government’s response, inevitable, emerged in phases: first stimulating demand from young people, then signaling the importance of public provision and, now, finally pointing to the role of private companies. However, there are still significant gaps and challenges that need to be addressed for these measures to have a lasting impact.
Among the positive points, the reduction in the VAT rate for construction and rental at moderate prices stands out, a measure with the potential to unlock projects that were on hold and stimulate new supply. The reduction in the IRS to 10% on affordable rents, which can even reach zero depending on the discount in relation to the municipal median, constitutes another relevant incentive, as well as the exemption from the additional IMI for rented housing. These measures alleviate the fiscal burden and can generate confidence among owners and investors, creating conditions for greater dynamism in the housing market.
But the risks and omissions cannot be ignored. There is no mechanism that ensures that the reduction in VAT effectively translates into lower final prices for the consumer. The rent limit of up to 2,300 euros is debatable and may not correspond to what most families understand as affordable, and may even lead to a rise in rents to that level. The penalization of purchases by non-residents may curb some speculation, but it also discourages foreign investment which, when well-structured, is vital to boost the sector. And, above all, none of these measures solves the structural problem of the scarcity of adequate and available supply.
Structural barriers go far beyond taxation: slow licensing, outdated urban planning, rising construction costs and a lack of specialized labor continue to limit the sector’s ability to respond. Until there is a national housing strategy that tackles these blockages in a coordinated way, any measure will have limited or temporary effects. This, from iad Portugal’s point of view, is the biggest gray area in this package.
On the private sector side, availability exists. Promoters, investors and mediators are prepared to contribute to more and better housing, but trust is essential. What keeps investment away are not only costs, but also regulatory instability, the perception of constant changes depending on the political cycle, regional discrepancies in procedures and a State machine that is often hostage to bureaucracies that function as barriers to power. A healthy market requires predictability, transparency and clear rules.
We will see if the new Government will be able to come up with measures that fill these gaps, ensuring that tax and regulatory incentives effectively translate into greater supply and more affordable prices, and not just superficial stimuli. The real test will be the ability to create a pact between the State, local authorities and the private sector, where everyone assumes clear responsibilities and works together to expand the supply, effectively rehabilitate and protect the most vulnerable citizens.
The housing challenge cannot be resolved in months or in legislatures. It needs a long-term vision, from 10 to 20 years, that survives changes in Government and that is seen as a national priority. The measures now approved by the Council of Ministers are a relevant step, but the journey will be long and demanding. The future of cities and the quality of life of Portuguese families depend on political courage, institutional coordination and the commitment of all actors involved.
CEO of iad Portugal