Portugal Fast-Tracks Housing Funds to Tackle Shortage
The Portuguese government has moved to accelerate payments for social housing projects under the '1.º Direito' (First Right) program, a key initiative funded by the national Recovery and Resilience Plan (PRR). A new technical guideline issued by the 'Estrutura de Missão Recuperar Portugal', the body overseeing the PRR's execution, will allow municipalities to receive substantial funding advances, aiming to speed up the construction and rehabilitation of thousands of homes across the country. This policy shift is designed to address critical housing shortages and inject vital liquidity into the construction sector, which has faced challenges with bureaucratic delays.
The primary objective of this new measure is to streamline the cash flow for municipal-led housing developments. Previously, local authorities faced significant waiting periods for funds, pending a full review and validation of expenses by the Institute of Housing and Urban Rehabilitation (IHRU). Under the revised procedure, municipalities with completed or delivered housing projects can now receive up to 95% of the total allocated funds before the final bureaucratic sign-off. For projects that have surpassed the 50% completion mark, an advance of up to 85% of the total cost will be made available. This change is expected to significantly reduce the financial strain on municipalities and their construction partners, enabling a more rapid project turnover.
This strategic decision comes as Portugal grapples with a housing crisis, particularly in high-demand urban centers like Lisbon and Porto, where property prices and rental costs have soared. The government aims to increase the public housing stock and provide affordable living solutions for low-income families. By ensuring that PRR funds are disbursed more efficiently, the government anticipates a notable increase in the pace of housing delivery. The '1.º Direito' program is a central pillar of this strategy, and its success is considered crucial for achieving the nation's social and economic objectives outlined in the PRR.
Officials from the 'Associação Nacional de Municípios Portugueses' (ANMP) have reportedly welcomed the development, noting that the previous payment model often led to project stalls and increased costs. A more fluid funding mechanism will allow for better planning and execution of construction timelines. The IHRU will continue its oversight role, ensuring that all projects adhere to regulatory standards and that funds are used appropriately, but its validation process will no longer be a bottleneck for the disbursement of the majority of the funds. This represents a significant shift in the operational dynamics between central and local government bodies involved in the national housing strategy.
The policy is also seen as a measure to bolster the construction industry, which plays a vital role in the Portuguese economy. Faster payments will improve the financial health of contractors and subcontractors, many of which are small and medium-sized enterprises. This, in turn, is expected to secure jobs and encourage further investment in equipment and skilled labor. The government's initiative is part of a broader effort to leverage the €16.6 billion PRR fund to foster sustainable economic growth and enhance social cohesion in the post-pandemic era.
The 'Estrutura de Missão Recuperar Portugal' will monitor the implementation of the new guideline to assess its impact on the housing supply. The long-term goal is to create a more resilient and responsive system for public housing development, capable of meeting the evolving needs of the population. The success of this accelerated payment scheme could serve as a model for other public investment programs under the PRR, potentially streamlining processes across various sectors of the economy and ensuring that the benefits of the recovery fund are felt by citizens without undue delay.
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