However, in a country strongly marked by an aging housing stock, which suffers from severe deficiencies in supply and is going through a housing crisis that has not yet been addressed - despite numerous attempts, namely the "Mais Habitação" package approved by the previous government -, it is essential to question which mechanisms could be capable of taking concrete, effective, and agile measures - in time and procedure - to reverse the current trend.

In this regard, it is common to register indignation in the media and social networks, calling for a solution to the thousands of vacant, abandoned, underutilized, or severely degraded properties, often in central or strategic areas of cities, combined with the well-known phenomena of desertification of historic centers, exclusion of the population from cities, and gentrification, increasingly affecting urban centers. Intermediate measures - such as, for example, the increase in municipal property tax on vacant buildings in areas of urban pressure (Decree-Law No. 67/2019, of May 21) - seem to fall short of the intended deterrent effect. In this sense, it is necessary to question which instruments available to the competent entities should be prioritized in public policy for this purpose, as key elements in the fight against the existing trend.

This was the motto of the "Mais Habitação" package when it approved a regime that provided for the coercive rental of properties in these conditions. However, as it will be known, the controversy with which the approval and entry into force of this regime was received immediately foreshadowed its outcome - its inevitable repeal by the government of Luís Montenegro, through Decree-Law No. 43/2024, of July 2.

Thus, and besides a myriad of other measures that could be listed as suitable for fulfilling this critical mission (see the forced sale regime for properties established in the RJRU itself, which was innovative when introduced), in this context, it will always be inevitable to look at the expropriation of properties by the public administration in the specific context of urban rehabilitation as one of the most effective instruments in this critical mission of rehabilitating our housing stock (and not only).

However, the question arises how to balance the conflicting interests between the obvious and urgent needs that the Public Administration intends to address, with the natural constitutional protection of citizens' property rights.

This always complex issue is broader and much earlier than the context of urban rehabilitation, with the Expropriations Code (Law No. 168/99, of September 18) being applicable as a structuring axis of this institute.

Thus, it is necessary to ask what opportunities, on the one hand, and what limitations, on the other, expropriation can assume and what weight it can have in defining public policies for urban rehabilitation, and in defining operations in each urban rehabilitation area.

Expropriation is always a necessarily serious, disruptive, and drastic act - by constitutional imperative, only for reasons of public utility and upon payment of just compensation can the public administration force this limitation on property rights, with the procedure established being heavily regulated by law and with legality requirements subject to meticulous scrutiny. The RJRU's specificities in leveraging this instrument are not facilitators, as the public purpose aimed at cannot be merely instrumental or apparent, with an effective obligation to ensure that the public utility aimed at with the expropriatory act is effective and materialized in the future, under penalty of illegality of the process.

The procedure, in this specific context, is the already known one that shapes all expropriative activity by public entities - which is simple in theory but lengthy and never free from litigation in its application. Consider the issue of just compensation - what criteria should preside over determining the amount of compensation to be paid to the individual in an expropriation carried out within the scope of an urban rehabilitation operation, especially when the goal is to place properties on the market? Moreover, what is the weight of the compensatory function in an inflated real estate market, and where is the boundary between the fair value of the property and the value at which it will be marketed after expropriation? Critics of this policy will always say that not only will there be an impossible disparity to remedy between the two, but also that the financial burden on public administration to implement expropriations in the context of ARU, given current market conditions, will be unsustainable from a budgetary perspective. If the aim is to expropriate a property to remodel it and obtain a return, necessarily intervening in the real estate economic ecosystem, we may be facing a perversion of the principle of just compensation, which expropriating entities are obliged to adhere to.

The legislative system in force for expropriations offers us a complex and structured regulatory framework, but for there to be true utility, it is imperative that regulation be effective and provide swift processes, coupled with the inevitable political will to risk innovative solutions that can complement it effectively, reinforcing articulation with territorial management instruments, ensuring that urban rehabilitation is not done "piecemeal", but integrated into the underlying strategy for ARU.

A balanced solution will always involve resorting to expropriation as part of a set of tools available in implementing urban rehabilitation operations - so that they are not, ultimately, justifications for "urban cleaning" at the expense of private interests and public finances, but can be effective and truly differentiating resources. Additionally, it is inevitable that the determination of just compensation be articulated with the challenges faced by the real estate market, ensuring balanced solutions.

Ultimately, although it pains us all to see city centers full of degraded and unoccupied properties, and it seems that the obvious solution is the expropriation of these properties, the success of urban rehabilitation will depend on the legislator's and administration's ability to combine equity, efficiency, and strategic vision, ensuring that exceptional instruments like this effectively serve the common good.

by Raquel Sirvoicar Rodrigues - Senior Associate of Real Estate at CCA Law Firm

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