Portugal approves law to reclassify land: 70% allocated to affordable housing
- Paulo Lemos
- Sep 10
- 2 min read
The Portuguese Parliament recently approved an innovative law that allows rural or industrial land to be reclassified for urban use, with the aim of increasing the supply of affordable housing. The legislation establishes that 70% of the reclassified area must be allocated to public or price-controlled housing, combating the scarcity and speculation that are putting pressure on the Portuguese real estate market.
The government expects that this measure, supported by a €4 billion budget package, will enable the construction of approximately 59,000 homes by 2030, benefiting low-income families and promoting greater social and territorial balance.
Objectives of the law
Increase the supply of affordable housing: 70% of the reclassified area will be allocated to public or price-controlled housing.
Streamline processes: allows municipalities to carry out the reclassification without multiple bureaucracies and intermediary agencies.
Encourage public and private investment: the legislation provides tax incentives and public-private partnerships (PPPs) for fast and efficient construction.
Market Context
Portugal is facing a housing affordability crisis, with purchase and rental prices rising above average incomes.
Lisbon and Porto are the most affected regions, with property values exceeding 16% by 2025.
Demand for affordable housing is high, while the residential pipeline, while growing, is often concentrated in the middle-to-high-income segments.
This law is an attempt to balance the market, ensuring that low-income families have access to adequate housing without compromising the country's attractiveness to investors.
Expected Impacts
For Citizens
Reduced pressure on prices and rents, especially in metropolitan areas.
Access to housing with more predictable cost conditions, allowing for greater financial stability.
For Developers
The law creates new development opportunities on previously unused land.
Possibility of partnerships with the State for affordable housing projects, combining profitability and social impact.
For municipalities
Greater capacity for urban planning, aligning new projects with local needs.
Responsibility to ensure that reclassification complies with environmental and urban planning standards.
Challenges and risks
Environmental sustainability
Some environmentalists warn that urban expansion could affect rural or protected areas. It is essential to reconcile urban growth with environmental preservation.
Practical implementation
The delivery of 59,000 homes by 2030 will require rigorous planning, efficient management, and constant monitoring of deadlines and construction quality.
Balance between supply and price
Although 70% of the area is designated for affordable housing, the remaining 30% could be concentrated in market-grade products, influencing the overall price of the reclassified regions.
Perspectives for the real estate market
If implemented effectively, the law could:
Significantly increase the supply of affordable housing;
Relieve pressure on rental and sales prices, especially in the most valued urban areas;
Attract qualified private investment, combining financial returns with social responsibility.
Furthermore, the measure can serve as a model for other European Union countries facing similar challenges in housing access.
Conclusion
The approval of the law reclassifying land for affordable housing represents an important step in Portuguese housing policy. By reserving 70% of land for public or controlled housing, Portugal attempts to balance rising prices with the need for social and territorial inclusion.
The law's success will depend, however, on enforcement capacity, compliance with environmental standards, and coordination between the government, municipalities, and developers.
If well implemented, the measure could transform the Portuguese real estate market, promoting housing affordability, responsible investment, and sustainable urban growth in the coming years.
Source: Reuters (reuters.com)
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