Portugal’s housing crisis has become structural. The price of urban land has been inflated by land valorisation processes that largely stem from the administrative reclassification of rural land as urban. This differential value, almost always captured by private actors, pushes families out of city centres and clashes with the constitutional principle of the right to housing.
For decades, the prevailing growth model relied on often fragmented peripheral expansion. Later, the Exceptional Urban Rehabilitation Regime (RERU) simplified procedures, reduced taxation and channelled investment into historic centres, with visible results in the rehabilitation of heritage and the revitalisation of urban life. Today, however, the central bottleneck is different: there is a shortage of serviced land available for construction at prices compatible with household incomes.
What is urgently required is more land; this is the condition that unlocks everything else. There can be no affordable housing without build-ready plots, well located and governed by clear rules. Opening up land in peripheral or poorly serviced areas does not solve the problem. It is essential to secure land close to jobs, services and transport and, above all, to ensure that the gains from land value uplift are not captured solely by private interests, but reinvested in housing, facilities and mobility.
At the same time, a new legal framework is needed. Decree-Law No. 117/2024 (in force since January 2025) profoundly reformed the Land Law and allows municipalities to reclassify rural land for residential use, requiring that at least 70% of the built area be allocated to public housing / cost-controlled housing / affordable rental, while respecting sustainability constraints (REN, RAN, areas of special agricultural aptitude, among others). This is a decisive step—because it decentralises and streamlines processes—but it is insufficient unless accompanied by a rule that closes the land value capture loop: municipal exclusivity in the transformation of land for affordable housing purposes.
It should be recalled that Portugal has previously used planning agreements to convert agricultural land into industrial parks, with clearly defined timelines, obligations and compensations—Guimarães is a clear example. What is now proposed is to extend this logic to housing. Moreover, European cities such as Vienna, Copenhagen, Zurich and Berlin already employ models based on public control of land transformation, the capture of land value uplift for the collective interest and social mix as a guiding principle of urban design.
What is proposed is a regime inspired by the RERU, tailored to affordable housing and built on three pillars. The first is municipal exclusivity in land transformation, setting plot values solely at acquisition and urbanisation costs, with no allowance for land value appreciation. The second is the 20/40/40 allocation: 20% of the area for public facilities, 40% for affordable housing under surface rights, and 40% for private development, sold by public auction, subject to urban planning rules and mandatory construction deadlines. Finally, targeted tax incentives: reduced IMI, IMT and VAT, and income tax deductions for affordable rental.
This does not require a legal revolution; it merely entails adapting mechanisms already established for industrial and logistics developments to the purpose of affordable housing. It should be emphasised that this model—high in social and environmental impact—is also strongly aligned with European instruments such as InvestEU and the EIB. The logic is simple: the municipality captures value and reinvests it in housing, with lower capital costs and faster delivery.
In conclusion, Portugal has the legal basis—requiring only a minor amendment—the national precedent and sufficient European references to launch, in the short term, housing programmes at fair prices. What is missing is political decision-making. Just as the RERU ushered in the decade of rehabilitation, this regime can usher in the decade of social integration: complete, mixed and sustainable neighbourhoods, where housing once again becomes a right rather than a privilege.
— in Jornal de Notícias, 24 September 2025