At the end of the Government meeting, Prime Minister Luís Montenegro stated that this measure for the sale of assets from an undivided inheritance, whether urban or rural, is intended to strengthen the rental and sales market for housing.

“It is not up to the State to forge solutions or limit property rights, but we cannot live without mechanisms to unlock deadlock situations” in inheritances that remain indivisible due to a lack of agreement between heirs, he added.

According to the Prime Minister, although a single heir can do it, the idea is that “everyone participates” in unlocking an undivided inheritance after two years, adding that the objective of the measure is “to avoid the existence of many vacant properties” and to strengthen the housing supply, both in rentals and sales.

Faster Inheritance Divisions
At the end of the Council of Ministers meeting on March 12th, the Minister of the Presidency announced that strengthening the mechanisms that accelerate the resolution of rural land and property divisions in cases of deadlock among heirs would involve resorting to succession arbitration (outside of court).

The intention, according to him at the time, is to accelerate "the use or sale of a property without a single person being able to block" the inheritance division, thus allowing rural land to be cleared and made profitable, and residential properties to be sold or rented.

The announced changes are part of the Government's third package of measures to increase the housing supply, which may also include measures to expedite evictions.

The Government also finalized the legislative authorization for tax incentive measures for the rental and sale of housing at moderate prices, including a reduction to 6% of the VAT rate on construction, and approved the final text of the Legal Regime for Urbanization and Building (RJUE) for "submission to the President of the Republic for promulgation".

Tax reduction and changes to the RJUE
Regarding taxation, the main measures include a reduction from 25% to 10% in IRS (Personal Income Tax) to encourage owners to rent out their homes, the exclusion of capital gains tax on the sale of residential properties in case of reinvestment in new properties intended for rent, an increase in the limit for rent deductions in IRS to 1,000 euros per month, and the application of IMT (Property Transfer Tax) of 7.5% to non-resident citizens when acquiring housing.

This set of tax incentives is, however, subject to “maximum limits on moderate monthly income and moderate sale price” which cannot exceed, in the case of monthly income, €2,300 (2.5 times the national minimum wage), and in the case of sale, the value of €660,982, and also the reduction of VAT from 23% to 6% on the construction of properties intended for sale or rent and on self-construction.

According to the head of government, the changes to the RJUE (Legal Regime for Urban Planning and Building) also aim to make “the rules clearer” and “the deadlines more predictable and shorter” to make more houses at lower costs “available to the Portuguese people”.

The legislation reduces construction deadlines through administrative simplification, specifically by reducing the time between the submission of the prior notification and the start of construction to a minimum of eight days.

In the assessment phase, consultations with the various entities that need to comment on the project are initiated in the same phase, thus preventing projects from being stalled in a single body awaiting a decision.

According to government estimates, the measures in the housing package cost between R$ 200 and R$ 300 million and should remain in place until the end of 2029.

Measures raise doubts
The measures approved by the Government to accelerate evictions and unblock undivided inheritances have generated divergent reactions among representatives of the real estate sector, jurists, and movements defending the right to housing.

Among the harshest criticisms were those of the president of the Lisbon Association of Property Owners (ALP) and former head of the Bar Association, Luís Menezes Leitão, who admitted doubts about the constitutionality of the proposed changes to undivided inheritances when they were announced on March 12.

Source: Lusa/Editorial Staff