Portugal Boosts Social Housing Supply to Revitalize Real Estate Market

The Portuguese government has unveiled a comprehensive policy aimed at tackling the country's housing shortage crisis while rejuvenating the struggling real estate market. With a decline in commercial real estate investment, efforts to increase the supply of affordable social housing are expected to provide a much-needed boost to Portugal's property market. Keep reading for the details of Portugal's initiative, highlighting its impact and potential benefits for both low-income individuals and the broader real estate industry.

The Housing Landscape in Portugal:

Just like many European countries, Portugal has faced a decline in commercial real estate investment in recent years, leaving a significant impact on its property market. While the market is slowly recovering, it is still far from reaching its peak of a few years ago. Recognizing the ongoing challenges, the government aims to stabilize the market and prevent further losses through strategic interventions.

Addressing the Crisis: Increasing Social Housing Supply:

Portugal's government has acknowledged that the current economic climate presents an opportune moment to bolster the availability of social housing. Social housing refers to properties with essential amenities that are offered at affordable rates to low-income individuals. By directly leasing properties from individuals and businesses, the government pays rent to landlords and then subleases them to households in need. This approach ensures that the cost of rent does not exceed 35% of a household's total income.

Eligibility Criteria and Rental Terms:

The scheme, known as "Rent to Lease back," primarily targets specific demographics, including individuals under the age of 35, single parents, and households experiencing a significant decline (over 20%) in income compared to the previous year. The government aims to create stability and sustainability by offering rental contracts of a minimum of five years and a maximum of thirty years.

Benefits for Investors and Landlords:

The plan has garnered considerable attention from investors due to the attractive level of return it guarantees. Property owners participating in the long-term program benefit from exemptions on property tax, personal income tax, and corporate income tax. This incentivizes both existing landlords and potential investors to engage in the construction of new, low-cost apartments, thereby driving growth in the real estate sector.

Spurring Economic Growth: Revitalizing the Construction Industry:

In addition to increasing social housing supply, the Portuguese government expects this initiative to reinvigorate the construction industry. The construction sector has experienced stagnation, and by encouraging landlords to participate in the program, the government offers incentives such as covering brokerage fees equivalent to two months' rent. This not only assists individual landlords but also bolsters the brokerage firms involved.

Portugal's comprehensive policy to augment the supply of social housing and support the struggling real estate market holds promising prospects for the country's economy. By addressing the housing shortage crisis, the government endeavors to stabilize the real estate sector, attract investors, and stimulate the construction industry. This initiative underscores Portugal's commitment to social welfare and economic growth, offering new opportunities for low-income households and a renewed sense of dynamism in the property market.