The proposed law aimed at encouraging housing construction and rentals through tax reductions was approved at the last Council of Ministers meeting, as announced by the Minister of the Presidency.

The proposed law, which will go to Parliament, includes legislative authorisation to reduce existing tax burdens on the construction of homes intended for residential use and residential rental, explained Minister António Leitão Amaro at the end of the meeting.

This measure comes after the Government approved the “Build Portugal - Leasing and Simplification” program in September, which foresaw a 6% VAT rate on the construction of housing for sale up to €648,000 or, in the case of leasing, for rents up to €2,300, to be in effect until 2029.

In a press conference Leitão Amaro explained that the AD government approved the decree that significantly reduces taxation in this sector.

The measures aim to create a “framework of stability for investors who promote” housing intended for rent and a “very significant tax relief for moderately priced houses,” with “moderate rents” up to €2,300 and houses for sale up to €648,000, he said.

Homes for the middle classes

The Minister of the Presidency stated that these levels refer to "homes that the middle class can afford and that have an exclusionary objective: luxury homes."

"We didn't want to create another small program to cover a few tens of thousands of homes; we really want a tax relief that covers the vast majority of Portuguese people," he argued, justifying the executive's initiative.

Leitão Amaro stressed that "it was not possible for the Portuguese to complain" about expensive housing while the State continued "to increase the cost of homes with so many taxes."

The Council of Ministers also approved another decree to create a new regime for the organization and construction of buildings, Leitão Amaro announced.

This proposal will bring a "cut in bureaucracy so that urban operations can be carried out, so that construction and rehabilitation in Portugal can be done" more quickly and with lower contextual costs, he said.

The two decrees, he added, are "essential instruments for building more houses."

The two decrees will have to be reviewed by Parliament, which, in the case of taxes, has reservations about amending legislation when it implies changes in taxation.