Portugal to Reclassify Rural Land for Affordable Housing

25-01-25, 1:00 a.m.

Portugal’s parliament has approved measures to open rural land for urban development, with 70% mandated for affordable housing to tackle the country's housing affordability crisis.

In a decisive move on January 24, 2025, Portugal’s parliament passed a groundbreaking bill that empowers municipalities to rezone rural land for urban housing development—bypassing traditional multi-agency approvals—and mandates that at least 70% of the land be used for public or affordable housing, with price caps on new units to discourage speculation
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. Housing Minister Manuel Castro Henriques emphasized that the measure aims to tackle the country’s deepening housing crisis, with Lisbon rents having surged nearly 94% since 2015, and property prices rising by 186%
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The reform removes bureaucratic hurdles, granting mayors greater autonomy over land use while maintaining environmental protections by excluding ecologically sensitive zones. The law kicks off a broader push, including a €4 billion investment program set to deliver 59,000 affordable homes by 2030 .

Critics—including environmental NGOs and 21 advocacy groups—warn that the fast-track rezoning could threaten farmland and natural reserves, urging stricter approval processes and safeguards against urban sprawl
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. They caution that without diligent municipal oversight, the policy might erode agricultural land and disrupt ecological reserves.

For landlords and developers, the new legislation reshapes Portugal's housing landscape. By unlocking rural areas for residential construction under controlled pricing, it creates attractive investment opportunities—especially in municipalities set to benefit from reclassification. Simultaneously, capped pricing and a focus on affordable housing suggest rental incomes may stabilize rather than skyrocket, favoring long-term, prudent developers over high-margin speculative players.

This shift signals a move toward supply-side solutions in Portugal’s housing strategy, balancing investment opportunity with social responsibility and environmental preservation.
https://www.reuters.com/world/europe/portugal-assign-more-land-affordable-housing-prices-soar-2025-01-24/