March 14, 2024

Portugal's Housing Crisis: Winning Party Proposal

Article by
Rafael Gouveia

Portugal's housing crisis addressed by winning party AD post-election with proposals focusing on supply augmentation, tax reduction, and partnership promotion for construction and rehabilitation.

Portugal's housing crisis took center stage during the recent electoral campaign, underscoring the shared concern of all political parties, although with differing approaches. While left-wing parties advocate for increased state intervention and market regulation, the right-wing advocates for a more liberal approach.

Following the legislative elections on March 10, 2024, the Democratic Alliance coalition (AD), comprising PSD, CDS-PP, and PPM, emerged victorious with 29.5% of the votes, securing 79 deputies in the 230-seat assembly. In response to the housing crisis, AD has presented a comprehensive set of proposals aimed at tackling the issue head-on.

AD places significant emphasis on the urgent need to augment housing supply, a critical factor contributing to the crisis. They also underscore the importance of streamlining bureaucratic processes and integrating public properties into the market to foster accessibility and affordability.

For young people, who often face considerable challenges in accessing housing, AD has outlined specific measures. These include exemptions from IMT and Stamp Duty for home purchases up to the age of 35, as well as provisions for a public guarantee from the State to facilitate bank financing of up to one hundred percent of the property's sale value.

Furthermore, AD proposes the repeal of measures deemed detrimental from the "More Housing" program, such as forced leasing and rent freezing, while advocating for subsidies for vulnerable tenants. They also propose a subsidy allocation based on income and effort rate, along with the maintenance of a dynamic rent subsidy targeted at families facing high effort rates, without limitations to contracts signed until March 2022.

In terms of taxation, the right-wing coalition advocates for the application of a minimum VAT rate of 6% on construction and rehabilitation works, as well as the promotion of public-private partnerships to build and rehabilitate on a large scale.

These proposals reflect AD's vision of how to address the housing crisis, prioritizing increased supply, reduced taxes and bureaucracy, and the promotion of partnerships for construction and rehabilitation. 

While YPA acknowledges the potential efficacy of some of these measures, such as the IMT exemption and lower VAT on construction, it is important to monitor their implementation to assess their real impact on citizens and the Portuguese real estate market in the upcoming years.