The government's legislative authorisation to formalise a series of changes to VAT in construction, such as the application of a reduced rate on some contracts, was rejected in Parliament this Thursday, November 28.
The measure was part of the State Budget for 2025, which was approved as a whole in Parliament today. The request for legislative authorisation on VAT was rejected with PS, PCP, BE and Livre voting against, Chega and PAN abstaining and PSD, CDS-PP and IL voting in favour.
APPII: rejection of the measure ‘will make the housing crisis even worse’
In a statement, the Portuguese Association of Real Estate Developers and Investors (APPII) expressed its ‘enormous indignation’ at the rejection of the legislative authorisation to reduce VAT on residential construction from 23% to 6%.
This decision ‘seriously jeopardises all the efforts made so far to combat the housing crisis in Portugal and will cancel out all the measures previously announced by the government for this national priority’. APPI reiterates that ‘as long as there is no political courage to bring about a reduction in the VAT rate on housing construction, the Portuguese will continue to be unable to afford a home’.
‘The opposition's rejection of this measure reveals a huge lack of direction’
‘The rejection of this measure reveals a huge lack of sense of state on the part of the opposition. The Portuguese can now blame the PS, PCP, BE, Livre and now also Chega and PAN for the sharp worsening of the housing crisis that they will feel from now on,’ says Hugo Santos Ferreira, President of APPII, adding that ‘after all the wrong measures that the PS and the Left, ideologically, have been creating in recent years, which have only resulted in rising prices and a decrease in the number of homes built, the truth is also that all the measures that the current government has been implementing will be of no use unless there is a structural measure such as lowering VAT to impact the market.’
Measures such as the Simplex in licensing, or the even more recent measure to convert rustic land into urban land to create more houses, ‘which, although they may seem positive in some cases, will have no consequence or impact on the construction of more houses, both for sale and for rent, without a structural measure such as lowering VAT on construction,’ the association emphasises.
The APPII recalls that reducing VAT on construction is ‘just a demand from the sector, but a common sense measure, widely adopted in other European countries as a way of boosting economic activity and ensuring decent housing at affordable prices’. With construction costs reaching historic highs and the housing market under intense pressure, maintaining a high VAT rate ‘seriously jeopardises the financial balance of housing projects and exacerbates the housing affordability crisis’.
In this sense, the APPII emphasises that ‘it is essential to have the political courage to implement consistent and structural policies that accompany the collective effort needed to mitigate the housing crisis. It is imperative to re-evaluate this decision and prioritise measures that promote an environment conducive to the construction and rehabilitation of affordable housing, thus guaranteeing the right to housing enshrined in the Constitution of the Portuguese Republic.’