The Government is turning its back on housing

Opinion: By Hugo Santos Ferreira, President of the Portuguese Association of Real Estate Developers and Investors (APPII).

Real estate developers and investors are looking forward to the conclusions adopted by the Council of Ministers last week to address the subject of Portugal’s chronic housing shortage.

The situation is serious, it affects Portuguese citizens, specially the lower classes and young people, and the APPII.
The Portuguese Association of Real Estate Developers and Investors believes that urgent measures are needed to come up with solutions to Portugal’s housing crisis. But, as Shakespeare said, it was “much ado about nothing”.

In this case, in the face of the expectations on the problem, the measures announced do not solve the housing problem in Portugal.

As well as being insufficient, they exclude building new housing stock, which is the most important measure of all to tackle this issue in our view.

The housing crisis requires a long term policy. Successive announcements of changes in the legislation have provided no confidence for investors, particularly foreign investors.

The first step to start dealing with this problem is to create the right conditions to stabilise the Government’s policy on rents. The measures that have been recently announced do exactly the opposite. Instead we only see compulsory measures, compulsory works, and mandatory renting. All these policies undermine the trust of those who are still thinking about investing in renting in our country.

Furthermore, there is an absence of measures and incentives for new construction. Except for amendments in municipal licensing procedures, no measure that was announced encourages building and putting more new construction on the market.

It is worth remembering that last year only one-third of the amount of construction built in 2008 for housing was done and that was at the start of the economic crisis.

Moreover, of the 170,000 properties bought and sold in 2022, only 11% were new build, thereby demonstrating the lack of new construction on the market.

Only projects to build new housing can truly provide a medium to long term solution for the housing problem in Portugal.

Similarly, no measures fostering house purchase by young people were included, not even measures aimed at favouring green/sustainable housing. It was a wasted opportunity.

We are particularly concerned about the assault on tourism and foreigners in the measures announced to restrict, or as they call it “free up” properties used for self-catering tourist accommodation or Local Accommodation as we call it in Portugal.

Reducing places for tourists to stay will only stifle demand from overseas tourists and given how important tourism is to the Portuguese economy (almost €17Bn in 2021) that would be disastrous and seriously impact Portugal’s economy, particularly in cities (around €15Bn in 2018 in Lisbon alone). It also hammers commerce and urban rehabilitation in our country.

An attack on private property

The Government’s policy on the mandatory rental of vacant properties is truly an attack on private property that will do nothing to further investors’ trust. Ending the property option for Portugal’s hugely successful Golden Visa programme (it provided the Government with €6Bn of investment and created work for hundreds of law firms, accountants, estate agents and other service suppliers) is mind-boggling, especially in the absence of concrete facts and figures or any independent study to support such a decision.

The decision is rash and harms efforts to attract foreign investment and, consequently, stymies wealth-creation in Portugal.

Between 2012 and 2022 the Golden Visa programme attracted €6.7Bn, created new jobs and made a positive contribution to help us overcome the previous economic crisis and recession.

Even in 2022 the programme attracted over €650 million. It is incomprehensible how the Government can scrap such an important programme without even undertaking an impact assessment, when the figures demonstrate that the Government should retain and encourage the programme.

And its ridiculous to say, as critics and government figures suggest, that the Golden Visa programme was forcing ordinary Portuguese out of the housing market whenIn 2022 “Golden Visas” amounted to just 0.6% of the total transactional turnover of properties in the Portuguese housing market, just 1,100 transactions for “Golden Visas” from a total of 17,000 houses transacted”.

Finally, I would like to stress once again that real estate developers and investors want to be part of the solution to the problem and are fully open to investing in building new houses as soon as the minimum conditions are met, such as relaxing the crippling taxes on the house building sector. It is high time to finally face this problem courageously!

Photo: APPII – Joaquim Morgado