Summary:
Government changes regulations to reclassify rustic land for urban use to address the housing crisis.
Only lands with minimal environmental impact will be eligible for reclassification.
Municipalities will have more control over the reclassification process, increasing transparency.
70% of new housing must be controlled-cost or moderately priced.
Maximum prices for housing will be based on the national median sales price.
Government's Bold Move to Tackle Housing Shortage
The Portuguese Government has decided to alter the regulations regarding the reclassification of rustic land to urban land, aiming to provide more land for housing construction. This measure is a response to the acute housing shortage felt particularly in major cities.
What Land Can Be Used?
The rustic lands are generally included in the National Agricultural Reserve or the National Ecological Reserve. The government states that only lands with minimal environmental impact can be reclassified. Notably, construction will still be prohibited on:
- Highly arable land
- Coastal areas
- Land prone to flooding, such as former riverbeds.
Simplified Reclassification Process
One major change to the law is that municipalities will now have the primary role in determining which lands are eligible for reclassification. Previously, this process required input from various entities, such as the Regional Coordination and Development Commissions and the Portuguese Environment Agency. Under the new regime, municipalities will first identify eligible lands and then authorize the reclassification, promoting transparency and public oversight.
Speeding Up Housing Availability
The government aims to simplify not only the reclassification but also the authorization and licensing processes for construction, ensuring that new housing is made available as quickly as possible.
Limits on New Housing
There will be limitations on the types of buildings allowed. 70% of new housing must be either:
- Controlled-cost housing provided by municipalities
- Moderately priced homes built by private developers.
The remaining 30% can be for other purposes, including commercial spaces or housing without price restrictions.
Understanding 'Moderate Prices'
The maximum price for these homes will be determined based on the median sales price per square meter of family housing, as calculated periodically by the National Institute of Statistics (INE). Currently, the national median stands at €1,661 per m², with the maximum allowed being either this figure or 125% of it, whichever is higher. For more expensive municipalities, a second maximum price of €3,737 per m² will apply, ensuring that even high-demand areas have a cap on prices.
Rental Market Dynamics
While there will be set prices for sales, there will be no price caps for rentals if developers choose to build for rent. The government's expectation is that an increase in housing supply will lead to lower rents in the long run.
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