20 October 23 | Lisboa
“More Housing”

Law 56/2023, published on October 6th, approves measures under the “More Housing” Programme.

Law 56/2023, published on October 6th, approves measures under the “More Housing” programme, making various legislative amendments.

Firstly, it establishes support for the promotion of affordable rental housing, which the following entities have access to, within the established legal parameters: 

a)     Housing and construction cooperatives

b)    Commercial companies engaged in the construction industry

c)     IHM - Madeira Housing Investments, EPERAM, and the Azores Regional Directorate for Housing 

d)    Municipalities and parish councils

e)     Church-based social work organisations (“misericórdias”), private institutions of social solidarity, and legal entities of public administrative utility or recognized public interest.

These beneficiaries can access the incentives provided for in tax legislation, as well as support modalities such as a funding line or the cession of public lands and buildings.

The law also establishes the development of a New Generation of Cooperatives for the Promotion of Affordable Housing. The cession of public buildings will be allowed through a protocol between cooperative sector entities and the Institute of Housing and Urban Rehabilitation (IHRU), within the scope of creating a set of affordable housing pilot projects.

The protocol must be concluded within 30 days of the law coming into force and must include: 

a)     The identification of the public buildings to be transferred

b)    The available and to be created funding instruments

c)     The necessary implementation acts prior to the start of the pilot projects

d)    The obligations assumed between the parties regarding the promotion and technical, legislative, and institutional support to the participating housing cooperatives and citizens interested in their establishment.

The legislation defines a cap on the initial rent in new residential lease agreements, providing that it cannot exceed the value of the last rent for the same building in a previous contract, after applying a coefficient of 1,02.

This cap applies to buildings whose lease contracts were in force in the five years prior to the entry into force of this law. However, there are some exceptions. Rents may exceed this limit when the previous lease contract has not undergone one or more legally allowed updates or for properties undergoing major refurbishments or renovations.

Additionally, housing leases signed before 1990 will not be transferred to the New Urban Lease Regime (NRAU) if certain requirements are demonstrated by the respective tenants. The state will pay rents when there is a default of more than three months, thereby replacing the tenant, ensuring fair compensation for the landlords.

The law also creates the Tenant and Landlord Counter (BAS), to ensure that the special procedures for eviction and for injunctions regarding tenancy work seamlessly.

Several tax measures were approved to incentivise and support renting, including new rules on the exemption from IRS on capital gains and on the exemption from IMI regarding land for development and residential buildings.

Concerning local accommodation establishments, the respective registrations will last for five years, renewable for identical periods by the local council’s decision. Registrations issued before the law came into force will be re-examined in 2030, and the new renewal rules will apply to them from that re-examination on.

However, new registrations will be suspended for apartments and accommodation establishments that are integrated into an autonomous fraction of a building, except for inland Portugal and the archipelagos.

These legislative changes also include the possibility for condominiums to oppose local accommodation in their respective autonomous fraction of a building or part of an urban building that can be used independently, through a ruling of more than half of the building's share.

Incentives have been established for the transition of local accommodation apartments into residential rental, namely the exemption from IRS or IRC on rents until the end of 2029 and no limit on the amount of rent. However, these incentives apply exclusively to owners who withdraw their houses from local accommodation by the end of 2024 and enter a rental contract by 31 December 2024. Furthermore, only buildings registered as local accommodation by 31 December 2022 are eligible.

Additionally, an exceptional contribution (CEAL) is created for apartments and accommodation establishments integrated into an autonomous fraction of a local accommodation building.

The law also sets an end to the issuing of new "gold" visas, not allowing new applications for residence permits for investment activities granted under the 1.5M euros capital transfer and real estate investment modalities.

Law 56/2023 came into force on 7th October 2023.


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