The amendments implemented by Ordinance Nos. 175/2019, 176/2019 and 177/2019.

 

The Decree-Law No 68/2019 of May 22, 2019 will be effective from July 01, 2019 creating the Affordable Rental Program.

 

The preamble to this Decree clearly states that “the Affordable Rental Program is a voluntary adhesion housing policy program that aims to promote an extended supply of low-cost rental housing to be made available at an effort rate compatible with household income”.

 

Thus, this diploma responds to the “the need to respond to new housing needs, which have spread to populations with intermediate incomes, who are currently unable to access adequate housing on the market without placing an excessive burden on the family budget”.

 

Landlords who adhere to the Program and to the conditions established by it – “particularly with regard to rental prices, minimum duration of contracts, insurance contracts, income and household effort rate, among others” – achieve through this scheme the exemption of taxation on property income.

 

However, the operation of the above-mentioned diploma lacks regulation, which was sought to be implemented with the Ordinances 177/2019, 176/2019 and 175/2019, which will be in effect simultaneously on 01 July 2019.

 

1. The relevant requirements for the properties (Ordinance 177/2019)

 

Establishes the provisions regarding the registration of housing in the Affordable Rental Program, namely (i) the minimum conditions of safety, health and comfort applicable to the accommodation, (ii) the minimum content of the accommodation form, (iii) the instructional elements to be presented in the registration and (iv) the content of the certificate of registration of the accommodation.

 

Recalling that Decree-Law 68/2019 of 22 May defines as "accommodation" (see paragraph a) of Article 4 of the Decree-Law) the object of a certain offer for rental under the Affordable Rental Program, which may consist of a «housing» - independent unit, closed by separating walls, where personal life is developed, which may correspond to an urban building, the part of an urban building not constituted in horizontal property, the urban part of a mixed building or an independent fraction - or in a «housing part» - the room located inside a house, including the right to use all spaces not related to the private use of other rooms, namely the kitchen or dining area, the sanitary facilities, the living room and the access to the outside.

 

As a result of the application of the ordinance, in order to be eligible for the Program, the housing must meet the following minimum conditions of safety, health and comfort (Article 2):

 

a) For the common parts, the most significant of which are the structure and roof, walls, floors and stairs, windows, doors and technical installations, there shall be no apparent defects which would constitute a risk to the safety or health of the inhabitants, or impair the normal use of these spaces;

 

b) The housing in which the accommodation is located must include (i) a living room with natural lighting and ventilation, (ii) a bedroom – being understood as "a room having a usable area of no less than 6 m² and with natural lighting and ventilation through window, glazed door or balcony in direct contact with the outside", (iii) a sanitary unit containing a washbasin and a flushing toilet, a shower base or a bath tub, and (iv) a space with a sink and conditions for the installation and use of a stove and a refrigerator.

 

The accommodation must also ensure “adequate and functional electricity, water supply and waste water facilities” and there must be no apparent anomalies which pose a risk to safety, health or the normal use of the housing, in particular on walls, floors, ceilings, stairs, doors, windows and in water, electricity or gas facilities.

 

The ordinance also states that, in addition to the above conditions, there is a need to ensure that access to the bedroom is via circulation space, the living room, or the kitchen, in the case of accommodation considered as “part of the housing”.

 

This diploma concludes by establishing in detail the information contained in the accommodation form - a document through which the owner makes his accommodation available for the Program - which includes a statement attesting to the veracity of the data indicated, and also that the accommodation ensures the minimum conditions we have already mentioned.

 

The registration also depends on the presentation of a land registry and energy certificate - the latter document with the cost defined by Ordinance No. 349-A/2013, November 29.

 

2. The requirements regarding Rents (ordinance no. 176/2019)

 

For its part, Ordinance no. 176/2019 establishes the general rent price limits per type and the reference value of the rent price per housing applicable in the Affordable Rental Program.

 

As a result, Portuguese municipalities are defined by level (E1 - which includes all municipalities that are not specifically identified - to E6 - Lisbon).

 

The maximum (monthly) rents are established as follows - adaptation of table II of Annex 1.

 

Echelon	T0	T1	T2	T3	T4	T5	Superior T5
E1	€200	€275	€350	€425	€475	€525	€525+nx50
E2	€250	€350	€450	€525	€600	€675	€675+nx50
E3	€325	€475	€600	€700	€800	€875	€875+nx75
E4	€400	€600	€775	€975	€1025	€1125	€1125+nx100
E5	€525	€775	€1000	€1200	€1350	€1500	€1500+nx100
E6	€600	€900	€1150	€1375	€1550	€1700	€1700+nx150

n = number of bedrooms above 5 

 

The table reflects the reference values for accommodation in its definition of «housing», however, the ordinance also states that the "general rent price limit of a "part of housing" corresponds to 55% of the general limit, applicable to the T0 typology for the municipality where the accommodation is located".

 

3. The requirements for Tenants (Ordinance No 175/2019)

 

Once the requirements relating to the properties and the corresponding rents have been set out, it is necessary to ascertain who are the people / tenants for whom the Affordable Rental Program is intended, which follows from the latest ordinance under review - Ordinance No. 175/2019.

 

The criteria chosen to define their eligibility is: households with a maximum gross annual income, as defined in the Annex to this ordinance.

 

Therefore (i) if the household is composed of one person the maximum gross annual income cannot exceed EUR 35,000 (figure divided by 14 months translates into a gross monthly income of 2,500); (ii) if the household is composed of two persons the maximum gross annual income (combined) cannot exceed EUR 45,000 and (iii) if the household is composed of more than two persons the maximum gross annual income referred to in (ii) plus EUR 5,000 per person.

 

This ordinance also clarifies that the minimum occupancy of accommodation is one person per room, as well as the requirements that any tenants must ensure for the purposes of their application, of which we highlight the need for a guarantor.

 

Additionally, there are specific provisions if the purpose of the accommodation is the temporary residence of university students.

 

This legislative package aims to achieve some compromise positions, attempting to slow down the speculation that has essentially taken place in large urban centers in recent years, by establishing minimum requirements for properties to be placed on the market under the Program, and by defining a rent value for them that takes these factors into account, however, it is not foreseeable that the solutions could be compromised, and it is very likely that we are facing an issue where it is not possible to please everyone.

 

 

June 2019.