Filipa Roseta, Lisbon: “There isn’t enough affordable housing”

The councilwoman responsible for housing and construction in Lisbon speaks on new housing incentives

June 5, 2023Real Estate
Written by Sarah Garnett

Lisbon is creating incentives for developers to create new affordable housing in order to solve the city's housing shortage, which is causing home prices to increase steadily in many areas. 

In recent months, Portugal’s government has attempted to pass a program to solve this issue: read about Mais Habitação, the package that will greatly affect those operating in the real estate market in the country.

The More Housing program announced several policies such as rent increase limits, tax breaks and the simplifying of licensing, the forced renting of unoccupied homes, subsidies for those with low incomes, and bans on further creation of ‘local accommodation’, which includes pr Airbnb.

This also meant the end of the Golden Visa, a decade-old program designed to incentivise international investments into the country’s real estate. It has been the subject of numerous complaints and controversy, as well as a large amount of money being invested in the Portuguese economy, particularly in real estate.

Filipa Roseta, the councilwoman responsible for housing and construction in Lisbon, spoke to GRI Club CEO & Managing Partner Gustavo Favaron at Portugal GRI in recent days, in order to understand Lisbon’s plans for this affordable housing and how to engage real estate developers.

Affordable Income Program Concessions 

While there have been 1,100 affordable lease houses delivered by the municipality in the last five years, there have also been 57,600 applications for said housing in the same period. Lisbon’s city government understands that more enterprises that provide this type of accommodation are necessary. As the City Hall has a substantial amount of land available, they are willing to use some for build-to-rent projects in this fashion while the housing market struggles.

Two tenders will be launched by the Lisbon City Council under the Affordable Income Program for the construction of 923 new homes in Benfica. This plan will take place this summer, between July and September.

Roseta said, “We are going to keep on building public housing for the poorest people. We are going to keep on having our public housing policy completely public in our property built by us for very poor families. But we think we can have a big market here in the mix of public and private.”

Read about how the end of Portugal’s Golden Visa affects real estate on GRI Hub.

Lisbon has a housing shortage that national and municipal governments are attempting to solve with various programs. (Photo: Pilens | Envato)

Incentives for developers

The city planned this incentive with the key gift of land to the chosen developer, with good locations and land frequently cited as significant hindrances to those operating in Portugal. Ideally, these projects will be completed by those with the capital to fund the builds, and the winning developer will be chosen by the city according to those with good reputations and available capital.

As for criteria for the developer, they need to be willing to work with the city and give the city housing with affordable rents, as well as providing the best possible offer for the service, while having a good track record. Roseta claims that there is an appetite for this project, as well as capital available, despite the complex real estate landscape with high inflation and interest rates. 

Read about other affordable housing projects from Lisbon city council here.

These projects will come with the pre-approval for urban design, with an understanding of which square meters the developer can build on. There is then space for the developers to define the project and create their own architectural design, which is usually preferred. Roseta told Favaron that there will be fast track approval for these projects for the later stages, while there are also tax incentives, particularly those related to VAT. 

There are also incentives surrounding parking spaces in order to ensure lower construction prices, and this easing of regulations will almost certainly be appealing for many developers.

Portugal saw €2,982 million in investments last year. (Photo: RossHelen | Envato) 

Investing in Portugal

Roseta says that they encourage developers from international spaces to come to Lisbon and make bids for this program, too. 

Lisbon is a city in focus for real estate players and safe investments, and Roseta emphasises that the city government would like to see further investment. Investment in Portugal totalled €230 million in the first quarter of this year, down 39% on the same period in 2022. 

This is according to data from CBRE, who have also reported that the gap between supply and demand in Portugal will continue to drive an increase in residential prices, although in Lisbon specifically there may be price stabilisation as development is taking place.

Alternative investments comprised 12% of investments in Portugal in 2022. (Photo: Mint_Images | Envato) 

Given the substantial rise in interest rates, added difficulties in securing mortgages and rent hikes, it is likely that the Build-to-Rent market will continue to grow and present new real estate investment and development opportunities.

In this case, Lisbon’s city council will ask for the best offer for this prime land, and it will be an opportunity to forge a partnership or enter the city. This is something that Roseta says all key players are invited to do, as Lisbon is a ‘great city’, and the governing authorities are working to build trust and partnerships such as these for the future of affordable housing.
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