The continuous rise in housing prices has made it increasingly difficult for young people to purchase their own homes, even when they are already in the labor market.

Due to prudential recommendations from the Bank of Portugal, banking institutions are subject to a maximum limit on the loan-to-value ratio, which often requires young people to have significant personal capital to cover the difference.

Main Measures of Decree-Law No. 44/2024

To address this issue, the new decree-law, which came into effect on August 1, 2024, introduces the possibility for the State to provide a personal guarantee for the acquisition of the first permanent residence, thus facilitating housing credit for young people. However, the measure is subject to certain conditions:

1. Age Range and Income: It is intended for young people aged between 18 and 35 whose income does not exceed the 8th bracket of personal income tax (IRS).
2.  Property Conditions: The borrower must not own any urban property or autonomous fraction of an urban residential property and must not have previously benefited from the State guarantee under this decree-law.
3. Transaction Value Limit: The transaction value of the property cannot exceed €450,000.
4. State Guarantee: The State's personal guarantee is limited to 15% of the transaction value.

This measure aims to allow credit institutions to finance the entire transaction price of the property, thus enabling young people to acquire their own homes.

Expected Impact

With the implementation of this decree-law, the Government aims to create conditions for young people to realize their life projects in Portugal. The measure seeks to mitigate the adverse effects of the housing crisis, facilitate access to housing, and promote greater stability for the youth. By making homeownership more accessible, it is hoped that this will encourage higher birth rates and reduce the emigration of skilled young people, contributing to the sustainable development of the country.