EU Approves 20% Advance Payments for Affordable Housing Projects in Portugal Under New Cohesion Policy
The European Commission has formally approved a revision of its 2021-2027 Cohesion Policy, introducing new flexibilities that will directly benefit Portugal's efforts to expand its affordable housing stock. In a statement released Thursday, the Commission announced that investments in key strategic areas, including “affordable and sustainable housing,” will now be eligible for pre-financing rates of up to 20%. This measure is intended to significantly accelerate the launch and execution of critical projects.
This policy shift is part of a broader modernization of the EU's cohesion framework, allowing member states to reprogram funds to address new challenges that have emerged since the programming period began in 2021. The new priorities also encompass investments in defense, energy transition, and water resilience. The European Parliament and Council have adopted the changes, empowering member states to immediately begin adjusting their national strategies.
Raffaele Fitto, the Executive Vice-President for Cohesion and Reforms, stated, “The adoption of the mid-term review proposal is an important step in modernizing the Cohesion Policy, allowing for a continuous response to current challenges.” He emphasized that the changes enable targeted investments in common European priorities.
Beyond the increased advance payments, the revised policy also offers more generous co-financing rates. Funds reallocated to these new priorities will receive a co-financing rate ten percentage points higher than the standard applicable rate. This effectively reduces the amount of national co-funding required from member states, easing pressure on public finances. For Portugal, this means the government will have to contribute less from its own budget to unlock substantial EU investment for housing.
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The Portuguese government is already moving to capitalize on these new rules. According to the Minister of Economy and Cohesion, a revised proposal for the Portugal 2030 strategic plan is being prepared for submission to Brussels. The updated plan, which will be presented to the Portuguese Parliament on September 24, will align with the new EU priorities. This reprogramming had been previously returned to Lisbon to incorporate a mandatory focus on defense and to address treasury pressures, as reported by the newspaper ECO.
While the advance payment rate for these new priorities is set at 20%, a reduction from a previous general rate of 30%, the targeted nature of the funding is expected to provide a more significant impact. Investments under the separate STEP platform (Strategic Technologies for Europe Platform), which includes areas like biotech and decarbonization, will retain the higher 30% pre-financing rate. The new flexibilities will become available to member states once the legislative changes are published in the Official Journal of the European Commission.
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