Here are some of the measures in the proposal that the government has placed in public consultation and which will be sent to the Assembly of the Republic.
Restrictions on the rent increase in new contracts
The initial rental value of new contracts for properties that have been on the rental market for the past five years cannot exceed 2% compared to the previous one. To this value can be added the automatic updating coefficients of the three previous years (if not applied), taking into account 5.43% compared to 2023.
Old rents updated for inflation
Old leases (pre-1990) that did not move to the New Urban Lease Regime (NRAU) are now updated based on inflation and benefit from IRS and IMI exemption. There is also provision for the payment of damages to landlords.
The state rents houses to sublet them
To increase the supply of homes on the rental market, the government proposes to let vacant homes to private individuals and then sublet them, with a maximum effort ratio of 35% for the tenant.
The rent between the State and the landlord is determined freely, as long as the amount does not exceed 30% of the general rent limits that apply in the Affordable Lease Support Program (PAA).
If a rent is agreed above the limits of the PAA (and up to the mentioned 30%), the owner has no tax advantage.
Lease contracts have a minimum term of five years and can be extended for an equal period if neither party objects.
Single Lease Counter
In order to simplify the procedures and to harmonize the operation of these mechanisms, the government wants to create a branch that brings together the Lease Bevelen Service (SIMA) and the Landelijk Leaseloket (BNA).
State pays rent arrears after three months of non-payment
The State will replace the tenant and pay rent with three months’ default, to strengthen the rental market. In this way, it is up to the State to assess the tenant’s situation and can proceed to collect the missing amounts using the currently existing resources for the collection of other debts. Since the non-compliance is due to lack of resources, the case is articulated with Social Security and withdrawn from the BNA.
Capital gains from homes sold to the state and municipalities are exempt from IRS
Capital gains arising from property sales to the state or municipalities are exempt from IRS, and only those earned by residents in the list of territories and countries that Portugal classifies as tax havens are excluded from this measure.
Currently, 50% of the capital gain generated must be added to the remaining income subject to progressive IRS rates.
Incentive to rent out AL homes
Homes currently assigned to Local Accommodation (AL) that are moving to the rental market are exempt from IRS on rent until December 31, 2030.
For this, the rental contract must be completed by December 31, 2024 at the latest and only homes with AL registration on December 31, 2022 are eligible.
Suspension of new AL licenses and expiration of registrations
The issuance of new local housing permits is suspended until December 31, 2030, with the exception of rural lodging areas.
In addition, the draft law provides that registrations issued on the date of entry into force of the new rules will expire on December 31, 2030 and can be renewed for five years thereafter.
This forfeiture does not apply in situations where AL establishments “constitute a true guarantee for loan agreements entered into on a date prior to the enactment of this Act”, if the loan is not fully paid by December 31, 2030.
Owners can oppose the AL
Owners can oppose the AN in self-contained fractions of buildings or in parts of urban buildings, if that is the decision of more than half of the building’s permit. Such non-opposition cannot be verified if the constructive title provides for such use (AL).
Outstanding contribution to the AL
Local accommodation will now pay an extraordinary contribution whose tax base is formed by the application of an economic coefficient (which takes into account the size of the property and income) and urban pressure. The rate applicable to this tax base is 35%.
The taxable asset value (VPT) for IMI purposes of houses in local accommodation is always equal to 1 and no longer benefits from the reduction in the aging coefficient associated with the age of the property.
Forced rental of vacant homes
It is one of the measures that has attracted the most criticism and consists of the possibility for the state, for reasons of public interest, to rent vacant properties and pay rent to the owner.
Vacation homes, which are vacant because the respective owner lives in a nursing home or provides permanent care as an informal caregiver and those of emigrants, as well as those of people displaced for occupational, health or educational reasons, are not considered vacant in this effect.
The owner is given a period (equal to 100 days) to start using the house before it is forced to rent out.
The law defining what constitutes an empty house already provides for water, light, gas and telecommunications companies to send a list of consumption information to local authorities, and the government’s proposal adds that this list will now become a mandatory matrix identification of each building.
Tax advantage when working on affordable rental housing
The government wants to increase the number of houses available in the Affordable Rent Program (PAA) and for this a VAT rate of 6% is foreseen in the construction work or renovation of houses usually allocated to this program (at least 70%), as well as exemption from IMI for three years (renewable for another five years) and exemption from IMT when purchased for rehabilitation.
Tenants can pass on the tenancy agreement to the tax authorities
From now on, tenants can report rental contracts, sublease agreements, commitments and associated changes or terminations to the Tax and Customs Administration if the landlord does not do so.
Exemption from capital gains on the sale of real estate to pay off a loan
The program provides exemption from capital gains on the sale of family property as long as the amount is used to pay the loan for the permanent home of the owner or his descendants.
This exemption applies to homes sold between January 1, 2023 and December 31, 2024.
Reduction from 28% to 25% of the special IRS rate on rentals
Rental income (when the taxpayer chooses not to include it) now pays an IRS rate of 25%, instead of the current 28%. In addition, the already existing reduction in the tax rate for contracts with a longer term will also be reduced and will fall from the current 10% to 5% in the longer term (more than 20 years), but will end for contracts with a term between two and five years.
End of ‘golden’ visas
‘Golden’ visas will no longer be granted for the acquisition of real estate, with the government proposing to make some refinements to the extension (every two years) of the already granted visas, namely providing that this will only happen if the real estate is used as a dwelling own and permanent property of the owner or descendant or if it is placed on the rental market for own and permanent housing for a period of not less than five years.
Conversion of business premises and services into homes
The possibility is being considered to automatically convert the use of commercial real estate or services into residential properties, eliminating the need to review zoning or housing permits, provided costs are controlled.
Land or buildings made available to housing cooperatives
The government also plans to make land or public buildings available to housing cooperatives for construction or conversion into affordable rental housing.
Licensing simplification
Architectural projects are now only licensed on the basis of the responsibility of the designers and public bodies are penalized in case of delay in issuing recommendations.
250 ME for affordable housing
The program provides for the approval of a credit line, with mutual guarantee and interest rate subsidy, for affordable housing projects, in particular construction or renovation, and for the acquisition of real estate to be placed on the rental market.
The houses promoted on the basis of this support are rented out affordably for a minimum of 25 years, whereby a longer period can be stipulated in the lease, after which the municipalities and the IHRU have the right of pre-emption when acquiring them.
Entities that can compete for this measure are cooperatives, commercial civil construction associations, municipalities and charities or other institutions of social solidarity.
Line of 150 ME for municipalities to carry out forced labor
The creation of a financing line of 150 million euros is foreseen, through the Banco Português de Fomento, so that the municipalities can carry out coercive measures, strengthening the fulfillment of the prerogatives of the municipalities within the scope of the legal regime of urbanization and construction.
Source: DN
