The Portuguese housing landscape is witnessing a decisive turning point with the entry into force of Decree-Law No. 117/2024, of December 30. This legislation, which reshapes the Legal Framework for Territorial Management Instruments (RJIGT), emerges as a robust response to the persistent housing crisis affecting the country. 

At the heart of this transformation is the determination to expand the availability of land for housing construction, with a particular emphasis on affordable and moderately priced housing. In a context marked by prohibitive property prices, this measure aims to democratize access to housing, promoting social justice and equal opportunities.

One of the pillars of this reform is the simplification of the process for reclassifying rural land into urban land. Previously, this process was slow and complex, posing a significant barrier to the development of new housing projects. Now, local authorities play a key role, with the power to reclassify land for housing, provided that a set of strict requirements is met, including:

• Priority allocation to affordable housing: At least 70% of the construction area must be designated for affordable or controlled-cost housing, ensuring that the law’s primary objective is fulfilled.

• Compatibility with urban planning: Reclassification projects must align with municipal master plans and other territorial management instruments, ensuring harmonious urban development.

• Environmental impact assessments: The reclassification of land must be preceded by environmental impact studies, evaluating the potential effects of urbanization on local ecosystems.

• Adequate infrastructure: Projects must include essential infrastructure, such as water and sanitation networks, access roads, and green spaces, ensuring a high quality of life for future residents.

However, the urgency to increase housing supply does not come at the expense of sustainable urban planning. The changes introduced seek to promote organized and balanced urban growth, preventing urban sprawl and environmental degradation. The construction of adequate infrastructure and the preservation of green areas are crucial elements in this new paradigm.

The Land Law has the potential to trigger significant transformations in the real estate market and territorial planning. The increase in housing supply may contribute to price stabilization and improved living conditions for many families. However, the implementation of this law will require rigorous oversight by the competent authorities to ensure that its objectives are achieved effectively and sustainably.

The entry into force of the Land Law marks the beginning of a new chapter in Portugal’s housing history. The changes introduced represent a significant step forward in addressing the housing crisis, but they also require ongoing debate and close collaboration between the various stakeholders involved.

Essential Additional Information:

• Mandatory percentage of affordable housing: The new law requires that at least 70% of the construction area be designated for affordable or controlled-cost housing.

• Construction deadlines: The law sets deadlines for the start and completion of works, preventing real estate speculation and ensuring that the land is used for its intended purposes.

• Environmental compensation: The law provides for environmental compensation measures to mitigate the impacts of urbanization, ensuring ecosystem protection and community well-being.

For a more in-depth analysis, consult Decree-Law No. 117/2024, of December 30, 2024, available in the Diário da República. If you have any questions or require specialized legal assistance, you may contact one of our lawyers at info@castilholegalcorp.com.