Government Secures €1.3 Billion EIB Loan and Moves to End Rent Controls
The Portuguese government, led by Prime Minister Luís Montenegro, has formally signed a contract with the European Investment Bank (EIB) for a credit line of more than €1.3 billion. The funds are designated for the development of affordable housing, marking a significant step in the administration's strategy to address the nation's housing shortage. The announcement confirms earlier statements by the Prime Minister and sets in motion a series of new policies approved during a recent Council of Ministers meeting.
The government's new housing plan includes several key initiatives. A central and potentially controversial measure is the proposed termination of the 2% ceiling on rent increases for new rental contracts. This policy shift aims to liberalize the rental market, a move long advocated by property owner associations. Alongside this, the government is also considering new legislation to facilitate eviction proceedings, a measure intended to reduce landlord risk and encourage more properties to be placed on the rental market.
In a further move to fund its housing strategy, the government is expected to authorize the sale of ten state-owned properties. According to reports from the newspaper Público, this portfolio includes the valuable former headquarters of the Presidency of the Council of Ministers, located in a prime area of Lisbon. The proceeds from these sales are to be exclusively channeled into financing new housing policies and development projects across the country.
The combination of a substantial credit facility, the deregulation of new rental agreements, and the strategic sale of public assets represents a multi-pronged approach to a complex issue. The Minister for Housing and Infrastructure, Nuno Morais Sarmento, stated that these actions are designed to “create a new paradigm in housing” by stimulating both public and private sector participation. He emphasized that the goal is to increase the housing supply rapidly and provide stability for the market in the long term.
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Economists are watching the developments closely. Dr. Sofia Almeida, a housing market analyst at the University of Lisbon, commented, “The EIB credit line provides essential capital for development, but the real market-shaker will be the removal of the rent cap. This could significantly increase rental yields in high-demand areas like Lisbon and Porto, attracting new investment but also posing affordability challenges.” The government has indicated that it will monitor the market's reaction closely to prevent excessive price volatility.
The implementation of this new plan is expected to begin in the coming months, with the first property auctions and the formal legislative process for ending the rent cap to be initiated before the end of the year. The success of these measures will be critical in determining the future trajectory of Portugal's real estate landscape. The administration maintains that this integrated strategy will provide the necessary tools to build a more dynamic and accessible housing market for all residents.
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