Housing in Portugal: there are no silver bullets, but there is a European path

As a professional in the sector, my reading is clear: this is a challenging target that will require a Herculean effort of coordination and a paradigm shift in the way we build in Portugal. Nevertheless, it is an achievable goal if we are able to combine political will with economic viability and the new European guidelines.

It is essential to understand that there is no silver bullet to solve the housing crisis. The solution does not lie in a single measure, but in a systematic and stable set of policies acting primarily on the supply side. Portugal faces a chronic shortage of housing stock and persistent delays in planning approvals; without addressing these structural issues, any stimulus to demand will merely place further upward pressure on prices. In this respect, reducing VAT to 6% on construction and refurbishment is a strong signal and a step in the right direction. This measure directly improves the viability of projects which, in the face of rising material and financing costs, were marginal or simply unfeasible. However, the effectiveness of this reduction depends on legal certainty and clearly defined affordability criteria, to ensure that the fiscal margin is not absorbed by land costs or other intermediaries.

Land, in fact, is the elephant in the room. If we attempt to build more homes on the same plots currently available, the only consequence will be an increase in land values. We need a structured land strategy capable of unlocking new sites or new development capacity. Here, the European model offers an unprecedented opportunity.

The European Union has taken a historic step by classifying affordable housing as social infrastructure. This new paradigm allows for long-term financing (50 years or more) for long-duration rental projects (cost rental), based on surface rights. Although still uncommon in Portugal, this model can drastically reduce the impact of land costs on the final price, making monthly rents genuinely affordable for the middle class. For this to work, we must be prepared to adapt our legal frameworks and embrace solutions such as collective ownership cooperatives. At the same time, the simplification of planning procedures (the Urban Planning Simplex reform) is vital. Time risk and the uncertainty created by lengthy and erratic processes are invisible costs that make housing more expensive. Predictability and transparency are the strongest incentives for investment.

Finally, I advocate a pragmatic approach to taxation. Mechanisms such as the selective increase of Municipal Property Tax (IMI) on vacant properties in high-pressure areas can be useful in tackling speculative land banking, provided they are accompanied by genuine incentives for moderate rents, such as reducing income tax on rental income to 10%. In short, resolving the housing crisis requires regulatory stability over several years and rigorous implementation. We need an intelligent balance between incentives for those willing to create supply and penalties for inertia.

Solving the housing problem is like building a bridge over a wide river: it is not enough to have the beams (fiscal measures) or the pillars (planning approvals). The entire structure must be aligned and grounded on solid foundations (a coherent land strategy) so that people can finally cross safely to the other side.

— in Jornal de Notícias, 27 January 2026