Almost becoming a tradition, the Urban Rehabilitation Week brought with it government news affecting the real estate sector. Specifically, at the opening of the last session on the afternoon of April 10, Hugo Santos Ferreira, President of the Portuguese Association of Real Estate Developers and Investors (APPII), shared the set of housing reforms announced by the government, many of which APPII has been dedicatedly defending in recent years.
In particular, Hugo Santos Ferreira emphasized the importance of not limiting demand and mobilizing the supply of affordable housing in a significant way. «The answer to the housing crisis does not involve freezing rents, but rather concrete measures aimed at increasing the supply of housing in all its components».
The President of APPII also pointed out that for the first time in 50 years of democracy we have such a favorable proposal, and once again the sector must not give up the battle, but must concentrate its efforts on implementing these measures".
Proposing a set of reforms to solve the housing crisis, the new government harshly criticizes the housing policies of recent years, especially the "Mais Habitação Program", which «have failed to increase access to housing, and have increased the difficulty of the population, particularly young people. Contrary to an ideological focus on restrictive measures that limit and clash with the right to property, and failed promises of public housing, the new government aims to mobilize society to effectively stimulate the supply of affordable housing, both in the rental and purchase markets, stimulating supply in all directions».
Increasing public, private and collaborative supply by making land occupation, densification and high-rise construction more flexible are measures welcomed by APPII. Likewise, the recovery of stability and confidence in the rental market is another of the fundamental pillars for unblocking access to housing. Following the success story of Madrid, which is currently planning to build 25,000 homes for rent, Portugal will now also have to increase its urban areas to accommodate the growing demand for housing. Finally, one of the measures that will be most appreciated by investors concerns the exceptional and temporary 6% VAT regime for new construction, facilitating the return on capital to promote affordable housing.
Cooperatives and other partnerships for affordable housing in Lisbon
After a welcome from Vida Imobiliária and APPII, Filipa Roseta, Councillor for Housing and Municipal Works, Lisbon City Council, presented the Lisbon Affordable Rental Program, highlighting three pillars: public, private and partnerships. With more than 23,500 municipal dwellings, the commitment to new solutions now involves collaboration between public and private entities.
In addition to having the largest municipal housing stock, Lisbon has public land with the potential to incorporate 9,000 homes (of which 2,000 could be made available to the market through rehabilitation). Looking at the figures in detail, the municipality aims to make 4,000 homes available at affordable prices through housing partnerships.
To this end, it is proposed to apply a 90-year lease model, with urban planning previously approved on the land. Transfer of the lease is allowed without interference from the public partner, and rents must be 20% below the market price. The criteria for selecting the investor to whom the land will be awarded is based on the most competitive rent proposal.
Taking another step towards solving affordability problems, Filipa Roseta also explained that the municipality is willing to support the difference between the family's 30% income and the final rent. In these housing partnership operations, Lisbon already has 647 units ready to be launched, divided into two projects in the Parque das Nações and Benfica Sul areas.
The Councillor also shared the approval of the new Lisbon "Cooperativas 1ª Habitação" (first house) program, in which the approval of subdivision as a mechanism for reducing urban risk stands out. This program currently has 5 projects with a total of 89 dwellings.
Public-private partnerships for affordable housing – How to make it happen?
To comment on the measures and proposals presented, Miguel Pereira Pinto, Director of Quest Capital, moderated a round table debate, focusing on the importance of stability at national level for the real estate sector.
Joaquim Lico, CEO, Vogue Homes, agrees that there is only housing if there is investment, and despite the ends an investor always seeks a return on his capital. Although Vogue Homes does not yet have a presence in the affordable housing sector, the CEO argues that «the success of municipal programs depends on them being built in partnership from the outset, because if they follow a unilateral model (as has been the case in recent years) we will get the same results as we have had so far....programs dragging on and on without implementation».
For Fernando Vasco Costa, CEO of VIZTA, concrete initiatives are needed to attract investors and test new housing models. «It's clear that collaboration between the public and private sectors is essential to meet the housing challenges in Lisbon and Portugal».
The CEO recognizes the enormous effort made by CML to simplify partnership processes, and guarantees that explaining affordable housing to investors is no longer necessary, as there are many entities, especially international ones, interested in investing in this segment.
Manuel Tereso, President of Fenache, expressed his disagreement with the restrictive policies that have limited progress in the housing sector. «In Lisbon, the CML has made deliveries, through a protocol with the cooperative federation, and around 3,000 homes have been built since 1991». In this regard, the President of Fenache asked whether it would not be easier to continue the process rather than betting on new measures, to which Councillor Filipa Roseta responded by expressing in a positive tone how, for the first time in 20 years, CML is once again giving land to the cooperatives.
Lastly, Manuel Brites, from Ecociaf, highlighted the importance of modular construction as an effective solution for controlling construction costs. In his words, «modular construction and prefabrication are effective solutions for reducing construction costs, allowing for greater standardization and process optimization. It's crucial that people feel comfortable in their living spaces, and these solutions should not be associated with lower quality or comfort».