A new decree law has been passed in Portugal, introducing changes to the legal framework of territorial management instruments (RJIGT). This law aims to increase land availability for housing construction under the government program “Construir Portugal.”
But what does this mean for real estate prices, urban planning, and housing development? Let’s explore the key changes and their impact.
Key Provisions of the New Law
Reclassification of Agricultural Land for Housing
The law allows the conversion of rural land into urban land for housing construction under the following conditions:
- The land must be integrated with existing urban areas.
- At least 70% of the construction area must be allocated for public or affordable housing.
- Construction must comply with the urban development plan.
⚠️ Restrictions: Construction is prohibited on land of high agricultural value and in protected natural areas.
Introduction of “Moderately Affordable Housing”
To ensure housing affordability, the law introduces a new pricing policy:
- Housing prices must not exceed the median price per square meter nationwide.
- Alternatively, the price may be set at 125% of the median price in a specific municipality.
- The maximum limit is set at 225% of the national median price.
This measure balances national and local real estate prices, preventing excessive price increases.
Accelerated Approval of Urban Development Projects
The law simplifies urban planning regulations, allowing:
- Faster amendments to territorial plans.
- Easier redevelopment of areas where industrial or infrastructure projects have ceased.
- Increased building density by up to 20% if at least 70% of the additional space is allocated for affordable housing.
Suspension of Regulations in Certain Development Zones
If municipal or intermunicipal urban plans are not updated within the specified period, their regulations will be suspended.
- During the suspension period, the use, development, or modification of land plots is prohibited.
How Will This Law Affect Real Estate Prices?
The government claims that these new measures will reduce housing prices in major cities by 20%.
✅ Expected Benefits:
- Lower housing costs in Lisbon, Porto, and other metropolitan areas.
- Increased availability of affordable housing, reducing speculation.
❌ Concerns:
- Environmental risks due to urban expansion.
- Potential land speculation instead of real efforts to ensure housing affordability.
- Challenges in maintaining sustainable urban infrastructure.
Public Reaction and Criticism
While the government sees this law as a key solution to the housing crisis, it has sparked protests from environmentalists and urban planners.
Critics argue that:
- The law may lead to uncontrolled urban sprawl.
- It will reduce green spaces and agricultural land, potentially affecting food security.
- Landowners may exploit the new regulations for profit rather than for building affordable housing.
Conclusion
The new law is a bold step toward addressing the housing affordability issue in Portugal. It opens new opportunities for developers, speeds up the approval process for construction, and lowers housing prices.
However, its long-term impact on urban planning, environmental sustainability, and market stability remains uncertain. Will it truly make housing more affordable, or will it create new challenges? Time will tell.
