Should the Government intervene in the real estate market?
According to some managers, it is preferable that the government does not intervene in the real estate market. They say that the market itself needs to flow and that is part of a natural cycle in this sector.
Noting the latest developments in the real estate sector, in which demand was higher than supply and for this reason, real estate considerably increased its values in 2018. The Government developed some actions to regulate a basic necessity for the Portuguese, as they are the ones who have more challenges in obtaining a house loan in the first place. Monthly rental payments have also risen in recent years, and for many families it is now unaffordable to pay rent for a house that is in line with the household number.
Low income housing program
The low-income housing program was one of the most recent actions, that is in force since the beginning of July 2019. On the first day, the program already had 191 prospective tenant applications. To apply for this program, the tenant must obey some terms, but the landlord can apply his property without too many obstacles.
The tenant must earn up to 35 thousand euros annually gross or 45 thousand euros annually gross if it’s a couple, plus 5 thousand euros per dependent person. The rental values can overtake 35% of the gross family monthly income to ensure an adequate effort rate for each family. In this program, the landlords are also benefited if the price decreases 20% relative to the base value of the rental (the value is adjusted by the house typology and its location). The landlord’s benefits are the exemption of personal income tax or the corporate income tax over the collected rentals, and a likely reduction on the municipal property tax. Situation dependent on the choice of the town hall where you are. There are still some guarantees secured with the insurance properly created for the affordable lease program.
In this program, not only individuals can apply for their properties, the government itself can do so. There are already 50 properties already for rent throughout the country, like the well-known Miguel Bombarda Hospital in Lisbon. In the Algarve, so far, we can count on 4 properties, 3 in Tavira and 1 in Lagos.
The meeting between the tenant and the landlord for the contract to be concluded may be direct or through a real estate agent. (find everything that you need through the program site, here)
Some associations believe that this measure will not bring the desired results to the dynamization of the leasing market. The maximum rent costs are still very high for most Portuguese, with a studio apartment in Lisbon having the maximum cost of 600 euros per month.
Housing laws
The housing laws were discussed during a year and came to light also at the beginning of July 2019. This law defined that the Government must guarantee the right to decent housing and that housing now has a social function.
Within the actions that make up the certificate of this law are:
- The National housing plan;
- Municipal Housing charters;
- Protection in eviction situations;
If the debtor is in a difficult situation to do so, the donation of the property to the bank to pay the debt will be possible. The guarantor may not be presented with more unfavourable conditions for the payment of the claim than the debtor. It is clearly stated in the certificate that every individual has the right to a decent house for himself and his family members. This way, only the government that can guarantee the right to housing.
It isn't conclusive yet if these measures will bring long-term benefits. What is certain is, that in the short term, quite a few families who do not currently have the best housing conditions will benefit from it.