Decent Housing Program: VAT at 6% and new measures to increase the supply of housing
- Redação Mudei e Agora
- 19 hours ago
- 2 min read
Within the framework of the "Decent Housing" policy, the Portuguese Government approved a broad set of measures with the stated objective of guaranteeing decent housing for all citizens. Among the most relevant decisions is the reduction of the VAT rate to 6% on the construction of houses for sale up to €648,000 or for rent up to €2,300, creating a direct incentive for the supply of housing for the middle class, especially in areas of greater pressure, such as Lisbon and Porto.
The Executive emphasizes that this €2,300 ceiling for rent acts as a maximum limit and aims to cover houses intended for families with some economic capacity, but who face difficulty accessing the supply available in large urban centers. The idea is to broaden the range of viable projects for developers, especially in contexts where construction and financing costs would make controlled-price rental operations unattractive.
These measures are part of a broader package that includes tax changes, simplified procedures, and strengthened public programs, with the aim of unlocking projects and accelerating the creation of new housing supply. By reducing VAT, the Government seeks to improve developers' margins and, ideally, allow part of that gain to be reflected in more moderate prices and rents, although the effective impact will depend on each local market.
Critics warn of the risk that the benefit will be captured primarily on the supply side, without translating into truly affordable prices for middle- and low-income families. Furthermore, the €2,300 rent limit is seen by some as high given the reality of many households, raising doubts about the effective social reach of the measure. The balance between the economic viability of projects and true accessibility will be one of the central tests of this program.
For the market, the “Decent Housing” program creates a more favorable framework for build-to-sell and build-to-rent projects targeting the middle class in high-demand locations. Developers who can optimize costs and typologies can take advantage of the reduced VAT to design competitive developments, while institutional investors find a more predictable tax framework for income-generating housing portfolios.
From a mediation and consulting perspective, it is essential to understand in detail the eligibility criteria and the price and income limits to advise developer, owner, and investor clients. Explaining how the benefit works, which market segments are most aligned with the program, and what regulatory risks may exist is a crucial part of the value proposition of any professional in the sector. At a time when housing policy is at the center of public debate, clear and up-to-date information has become a competitive asset.
Source: RTP – “Decent Housing. Government moves forward with ‘broad set of measures’”.
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