Portuguese President Marcelo Rebelo de Sousa has approved a decree-law permitting housing construction on rural land. The government, led by a center-right and conservative alliance, justifies the measure as essential to combat the severe housing crisis.
The new law alters the Legal Regime of Territorial Management Instruments established in 2015. It delegates the reclassification of rural land to local councils, allowing housing projects for public or “moderately priced” housing. However, critics argue that the law’s criteria for pricing—based on median local housing prices—could enable new homes to be sold above current market rates.
Portugal has experienced a sharp rise in property prices. In 2024, it saw the largest house price increase in the Eurozone, with a 3.7% rise, and rents grew by 7.2%, among the highest in Europe. Lisbon, one of the most expensive cities in Europe, recorded a median price of €4,367 per square meter.
The government contends that housing prices are inflated due to limited supply and expensive urban land, despite a stock of 720,000 empty homes across the country. “It makes no sense to maintain the ban on building on rural land with no farming value when housing costs are so influenced by urban land prices,” said Territorial Cohesion Minister Manuel Castro Almeida. The government plans to use €1.8 billion from the National Recovery and Resilience Plan (PRR) to provide housing for 26,000 families by 2026.
More than 600 experts have expressed concerns, warning that the law could lead to real estate speculation and harm agriculture, forests, and rural environments. In an open letter, they criticized the move as a "setback of decades," potentially fragmenting rural land essential for food security. Even President Rebelo de Sousa acknowledged the significant impact on land use in his promulgation decree.
The law’s opponents, including the Left Bloc, have called it a gift to real estate developers. Fabian Figueiredo, the party's parliamentary spokesperson, said it would “encourage real estate speculation, worsen climate change efforts, and increase corruption risks.”
The decree-law will return to parliament for debate on January 24, forced by opposition from four left-wing parties. Ministers Manuel Castro Almeida and Miguel Pinto Luz will testify alongside environmental and urban planning experts.
The Socialist Party has indicated conditional support, provided new houses are priced below the median for their locality and located in already urbanized areas to prevent demographic dispersion.
The 2024 change in government has led to the dismantling of previous housing measures introduced by António Costa’s socialist administration. These included forced leasing of long-term vacant homes and a special contribution on tourist apartments.
