The Socialist Party of Portugal (PS) has presented its electoral program for the General Election on May 18th. Their proposals for housing include specific changes for Alojamento Local, long-term rentals, taxes for non-residents and capital gains tax on property sales.
The most important proposals concerning housing are listed below, with our own interpretations, since the program doesn’t go into implementation details.
– “restore a set of rules for regulating Alojamento Local”. This is very likely to mean reverting back to the “Mais Habitação” program which was passed in 2023 but changed significantly by the Social Democratic Party (PSD) in October 2024,
– “encourage the transfer of properties allocated to AL for permanent rental housing”. A similar measure was already included in Mais Habitação, and at that time signified a tax exemption on long-term rental income for a property that had previously been an AL, if certain conditions were respected.
– “establish a capital gains tax exemption regime for the sale of second homes in areas under urban pressure”. This seems self-explanatory, and specifies that the exemption applies when the gains are invested in a primary residence.
– “increase capital gains tax on properties acquired and sold without having been restored or inhabited”. We believe the intention here is to penalise property speculation, and in particular the practice of directly “flipping” with no other objective but to make money.
– “review the calculation formula for rent increases, including the evolution of salaries in the adjustment criteria in years with inflation above 2%”. This is likely to be a 2% restriction on increases of long-term rental prices, especially when the tenant’s salary is low.
– “assess the tax framework for non-residents or residents outside the EU”. There are no further details on this one, but a possibility would be to increase the tax on property purchases for non-residents. Something similar has already been proposed in Spain, but with little chance of being approved.
– for long-term rentals, their proposals include creating a specific Urban Rental Code (Código de Arrendamento Urbano) to unify the corresponding legislation, instigate a rental regulatory body, create a framework to regulate “informal” contracts and policies for the municipalities to mediate between owners and tenants, and to encourage the use of rental insurance.
There are further proposals in the areas of construction, especially regarding the 6% VAT rate, personal finance for property purchase, finance for construction of social housing, and credit lines for condominium administrations to be used for building maintenance.
The full details can be read, in Portuguese, in the PS Electoral Program. We will attempt to analyse the housing proposals of the other major parties as and when they are released.