Portugal has taken a significant step towards addressing its housing crisis with a groundbreaking decree-law that promises to make home ownership more accessible to middle-class families. Approved by the Council of Ministers, this legislative change simplifies land allocation processes, which effectively empowers municipal chambers and assemblies to create new housing areas within urban zones. The innovative approach removes bureaucratic barriers and allows local governments to directly identify and designate lands suitable for residential development without requiring additional external approvals.
The new regulations come with a crucial provision designed to protect middle-class homebuyers: at least 70% of homes developed under these new rules must be sold at “moderate prices.” These prices will be calculated using a formula that considers both national and local median prices, which ensures that affordability remains a core objective. By directly targeting the housing supply challenge, the government aims to create a more balanced real estate market that serves the needs of average Portuguese citizens struggling to enter the property ownership landscape.
Deputy Minister of Territorial Cohesion, Manuel Castro Almeida, emphasized that land scarcity has been a primary driver of high housing costs. This legislative change directly addresses that challenge by streamlining land allocation processes while maintaining important environmental and agricultural protections. Municipalities will still need to respect national agricultural and ecological reserve specifications and ensure that new housing developments do not compromise critical natural landscapes or high-potential agricultural lands.
Infrastructure and Housing Minister Miguel Pinto Luz framed the initiative as a matter of national urgency, highlighting the government’s commitment to social equity through increased housing accessibility. The measure is part of the broader Build Portugal program, which seeks to ensure that every citizen has access to dignified housing. By creating a more flexible framework for land use and development, the government hopes to stimulate the construction sector while simultaneously providing more affordable housing options for middle-class families.
While the new rules represent a significant policy shift, they maintain important safeguards to prevent uncontrolled urban expansion. Construction will remain prohibited on lands with high agricultural potential, and the National Ecological Reserve’s fundamental natural values and protective functions will be preserved. This balanced approach demonstrates the government’s intent to solve the housing crisis without sacrificing environmental integrity or agricultural sustainability, which presents a nuanced solution to Portugal’s complex housing challenges.
This does raise the question of where the other 30% of homes in these new areas will end up. Given the current housing crisis, one would’ve hoped that this allocation of 70% of new homes needing to be sold at moderate prices would be more like 90-100%, as the wealthy can afford to buy new housing or renovate currently existing structures. Time will tell how this new decree-law will be implemented and enforced.
