The “housing crisis” in Portugal is a calamity, just as the implementation of the solution found by the government will be a calamity. The lack of housing and decent housing, in its social dimension, is an obligation of the Portuguese State and we have arrived here, exclusively due to the sum of the incompetence of the executives, since 1995. It is time for the Government to act in an effective, transparent, serene and appeasing way society and use the weapons at its disposal, where expropriation, coercive action and the destruction of part of the economy have no place. Fiscal policy and administrative speed are the true weapon that the state has at its disposal, given the current circumstances and the root of this crisis.
The housing crisis has a simple origin, simple analysis and simple resolution, but not immediate. To do so, it is necessary to study, understand and know its root, with the support of available national statistical data and market evidence…
- Why are the houses expensive???
Because there are more people wanting to buy a house than there are houses available for sale, the law of supply and demand;
- Why are more people buying houses???
It arises from a combination of factors… On the one hand, residents in Portugal accessed housing loans at very low interest rates, around 1.5%; and on the other hand, due to the fact that foreign buyers, who represent 30% of the market in the cities where this pressure is most felt (Lisbon and Porto) with a lot of purchasing power, chose our country to live in (not the Golden Visa, absolute anyone who thinks so is wrong, as they do not even represent 1% of the national market);
- Why are there few houses for sale???
Because construction production is low, we came from a crisis of 2008/2015, where many construction companies, business and industrial fabric and, above all, a lot of labor were lost (immigrants who became emigrants and who sought other economies to prosper), as a result of this, in the last decade 5 times fewer houses were produced than in the previous decade;
This scourge must be combated with urgency, intelligence and intellectual honesty, otherwise it will become a “national monster”, which, in addition to the obvious social crisis, brings with it devastating economic consequences for the country.
The crossroads in which the Government finds itself, means that some appeal to ideology, others appeal to increase taxes, others defend the end of Local Accommodation (AL) and the end of Golden Visa, others a ban on the sale of housing to foreigners (if rich, of course!) and the boldest defend the “OKUPA - Squat” State. All this, no more than resulting in the destruction of an important sector of the economy, in the abrupt decrease of foreign investment, in investor distrust and, obviously, in the non-resolution of the problem, contributing to the reduction of the country's economic activity, in the very short term.
The housing crisis must be fought by increasing supply and not by reducing demand, by increasing housing construction capacity (allied with other urban planning policies and sustained growth, of course) and not by creating acquisition difficulties.
The State, by the hand of its Government, has to act urgently and this is the moment, the moment of correct, capable, effective and intelligent decisions, this is in reality, the moment of the great opportunity for the national economy, in the production sector of civil construction in Portugaland without ever abandoning the path of the constitutionality of the actions and measures to be taken.
The State's dismissal of its obligations, such as social housing, "bad justice", the "horrible bureaucracy" and the "incompetence of licensing", together with the "high taxes" applied to the sector and families, are also clear contribution to what we are experiencing today.
There are constitutional weapons available to the government that not only solve this crisis, but also relaunch national production and growth. An efficient, intelligent, and easily enforceable government program is required, free from demagoguery and electoralism and without recourse to attacking private property.
Imagine, a State program for the resolution of this crisis, with a duration of 3 years, which focuses on all land for construction and buildings to be rehabilitated outside the urban rehabilitation area of cities (ARU) and classified buildings.
Imagine that the properties covered by the program, when sold for a maximum value per square meter fixed by the state, depending on their location, state of conservation and having the IMI as an indicator, the owners would be exempt from paying capital gains and they would still have other tax advantages, to be defined and depending on their classification, tax nature and IRS step.
Imagine that whoever buys these properties, under these conditions, is exempt from IMT on the acquisition and with a cost of 6% IVA (VAT) on construction, provided that they are obliged to allocate housing; with imposition of a maximum sale value per square meter, set by the State; of the resulting houses and as a result of their sale, there is no tax on capital gains or profits.
Imagine that whoever buys these houses, under the program, is exempt from IMT, IMI reduction, fixed-rate financing, subsidized and unable to resell and/or over-encumber the property, in the next 25 years.
Imagine that the builder can choose not to sell the units, but rather to place them in a “lease exchange”, for a minimum period of 25 years, with rules for the effect, exempt from leasing tax, an amount not exceeding 3.5% of the sale value set by the program (expected rate of return on investment on sale).
Imagine, that the renter of these houses, can deduct the income value in IRS, totally or partially, depending on his contribution scale and that the State is his guarantor.
Imagine that the investor who does not comply with the rules of the program, loses the property, that is, reverts the land or building to be rehabilitated, to the state and this is obliged to conclude the ongoing process.
Imagine that the properties (land or buildings of "origination") transacted in the program, have to start works 8 months after acquisition, project submission at the end of 5 months and the local authorities obliged to license at the end of another 3 months .
Imagine that, through this program, 20,000 houses were produced in 5 years, due to the 3-year duration of the acquisition program and 2 years to complete construction.
If you can imagine it, you understand that the housing problem in Portugal has been solved, that the annual volume of houses currently produced has increased by 20%, that it was done by the private sector, who are the ones who know how to do it, and that a simple program like this , does not allow the usual avarice, by any of the parties involved.
If you imagined all this, you also imagined that the problem of the regions surrounding city centers, which need life and rehabilitation, had been solved, that pressure had been removed where it exists today, that the urban crown had been increased and beautified and that quality of new construction for new residents.
Imagine also that in city centers (ARU) construction and rehabilitation will maintain the current dynamics, that a region with high real estate value will remain and that this is normal, complemented with fair alternatives for acquisition and leasing, which did not exist before.
And after imagining, you understand that imagining doesn't cost anything... And neither does doing it and that the state didn't put money into this operation, it just didn't raise money. That the transparency of the program is efficient, it is simple and that private property remains private.
On the AL, possibilities for improvement and control should be considered, either by including quotas by housing density, or by improving regulations on multi-family buildings, or by imposing AL only on buildings with seismic reinforcement, etc. Approaches that bring more investment and organization.
Alternatively, the AL is suspended, the number of tourists stagnates, average prices increase, the income from tourism is hopefully maintained and we save an absolute fortune at the new airport, and high-speed line, as such is obviously no longer justified.
Will the State let us imagine like this???
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