Soil Law: The Real Estate Impact

The Soil Law remains a central theme in the real estate sector in Portugal, with significant implications for housing supply and the impact on prices. The legislation allows the conversion of rustic land into urban, a measure that aims to increase the supply of land for construction, especially in large cities such as Lisbon and Porto, where there is a shortage of urban land. However, this change has also generated controversy, particularly regarding the risk of real estate speculation and the effects on accessibility to housing.

The Minister of Justice, Rita Alarcão Júdice, has been at the center of the debate due to her involvement with real estate companies. With stakes in several companies linked to real estate and tourism, the minister ensures that there is no conflict of interest, since her companies would not benefit directly from the new legislation. However, this link with the real estate sector has generated controversies about the transparency of political decisions and impartiality in the application of the Soil Law.

The Conversion of Soils and the Opportunities in Real Estate

The objective of the Soil Law is to increase the housing supply, allowing the reclassification of rustic land into urban ones. This measure seeks to facilitate the development of new ventures, particularly in the most sought-after areas, such as Lisbon and Porto. The Government and real estate developers argue that this will help relieve pressure on the market by offering more housing options.

However, experts point out that reclassification can lead to real estate speculation. The sudden appreciation of land can increase house prices, benefiting large investors, but making it difficult for many families to access housing. In addition, the lack of rigorous planning can result in an uncontrolled expansion of urban areas, creating areas with few essential infrastructure or services.

The Impact on House Prices

Although the creation of more land for construction can theoretically stabilize prices, many analysts fear that this will not be enough to solve the housing crisis. If the new land is intended primarily for luxury projects, house prices may continue to rise, making housing inaccessible to many families. The proposal to set price limits for new constructions arises as an attempt to avoid this problem. However, this measure meets resistance from real estate developers, who claim that price limitation may compromise the viability of the projects.

Regulatory Uncertainty

Uncertainty about the implementation rules of the Land Law is a significant concern for investors. Although the reclassification of soils can open up new development opportunities, regulation on prices and profitability can drive investors away from the sector. If price limits and profit margins are excessively restrictive, there may be a reduction in the construction of new projects, which would make it even more difficult to increase the housing supply.

The Reaction of Municipalities and Civil Society

Municipalities play a crucial role in the implementation of the Soil Law, as they are responsible for the approval of urban projects and territorial planning. Municipalities such as Oeiras have already expressed concerns about the risks of disorderly expansion and the possible deterioration of urban conditions. Civil society is also attentive, with several associations calling for more transparency in law enforcement and warning of the risk of legislation benefiting only large economic groups.

The Soil Law has the potential to transform the real estate market in Portugal, offering new opportunities for housing construction. However, for it to be effective, it is essential to ensure proper planning, clear regulatory policies and strict supervision. The Government, municipalities and investors will have a decisive role to ensure that the legislation benefits not only large investors, but also families who most need access to housing.

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Source: Supercasa