Porto City Council Proposes National Reform to Penalize Vacant Properties More Effectively
The municipal executive of Porto has issued a formal policy recommendation to the national government, calling for a strategic review of the legislation governing the Municipal Property Tax (IMI) as it applies to vacant buildings. The announcement, made on Monday, follows a unanimous vote in the city council to push for measures that would simplify and reinforce the legal framework, making it easier for municipalities to apply punitive tax rates to properties left empty. This initiative aims to address the city's ongoing housing shortage by discouraging speculative vacancies.
The primary policy objective is to amend the current law, which the Porto council describes as fraught with "procedural difficulties." These challenges have historically limited the city's ability to enforce the aggravated IMI, a tool designed to compel owners to either sell or rent out their vacant properties. The proposal submitted to the government outlines how existing legal exceptions allow many owners to successfully contest the penalty, thereby undermining the policy's intent. The targeted outcome is a more streamlined and robust legal process with fewer loopholes, giving municipalities greater power to tackle the issue of derelict and unused housing stock.
The implementation strategy involves legislative changes at the national level. The council's recommendation will be formally submitted to the relevant government ministries for consideration. The timeline for any potential reform is dependent on the government's legislative agenda. The proposal received broad cross-party support in Porto, with representatives from the Socialist Party, CDU, and Bloco de Esquerda all endorsing the move, suggesting a strong political consensus at the local level that may influence national debate.
This policy directly affects property owners in Porto and potentially across Portugal if adopted nationally. The primary affected group is owners of residential and commercial properties that have been vacant for an extended period. The geographic areas most impacted would be urban centers like Porto and Lisbon, where housing demand is highest. The proposal also suggests increasing the existing penalties for properties classified as "degraded," citing the positive effect this has had on encouraging urban renewal and improving public safety and health.
The budget allocation for this policy change would be minimal, as it primarily involves reforming an existing tax mechanism rather than creating a new program. The funding for enforcement would continue to come from municipal budgets. The economic impact is expected to be an increase in the available housing supply, which could help stabilize rental and sale prices. The social impact would be a more efficient use of the city's building stock to provide homes for residents.
The proposal has been developed following extensive stakeholder consultation at the municipal level, reflected in the unanimous council vote. The political support from opposition parties indicates a shared concern over the housing crisis. However, the proposal may face opposition from property owner associations and investors who benefit from the current system. The government will need to weigh these competing interests as it considers the reform.
The performance of the current policy has been deemed insufficient, prompting this call for reform. The proposed changes will be monitored by municipalities, which will track the number of vacant properties brought back into use. International comparisons with other major European cities facing similar housing challenges show that stronger tax deterrents can be an effective tool. This move by Porto aligns with best practices seen elsewhere. There is no significant political opposition to the principle of the measure within Porto's council, though the specifics of a national law could be subject to extensive debate in Parliament. Understand policy impacts on your Portugal property plans at realestate-lisbon.com.
