There are dozens of investors interested in developing built-to-rent projects in the country, and Sonae Sierra is one of them. However, these intentions are hindered by a lack of guarantees and incentives. In Spain, the concept is expanding rapidly.

There are many national and international investors who want to invest in built-to-rent (BTR) in Portugal. However, the current tax framework and legislative instability are hindering the development of these projects. In Europe, this model is one of the major dynamics in residential investment today.

In the Community of Madrid alone, 30,000 private sector homes are under construction, along with 8,000 in public-private partnerships. The Spanish company Kronos Homes, active in Portugal, has formed a joint venture with Nuveen Real Estate to build 5,000 homes in the neighbouring country, with an investment of one billion euros, as stated in recent publications by the company. Under the brand Stay by Kronos, they have five projects in development, distributed across Madrid, Valencia, Barcelona, and Pamplona, with four more in development and exploration in other important regions and cities.

Despite the experience gained and the success that Stay by Kronos is having in Spain, the developer does not plan to apply this model in Portugal, even though BTR projects are the most sustainable and viable solution for our country. However, uncertainties, particularly political, legislative, and fiscal, dominate over certainties, preventing investments of this nature in Portugal.

The biggest obstacle in Portugal is the rental legislative framework, which resembles a horror or disaster movie for investors or individuals looking to invest, due to its instability and imbalance, making it difficult to guarantee long-term projects of 30 or 40 years. The business plan becomes unpredictable. We have known for years that renting is an effective way to address the housing shortage, and I wonder why specific legislation for BTR has not been created yet, like urban rehabilitation, with a tax framework that encourages the development of these projects. I have yet to feel a genuine desire from political authorities to resolve the issue.

I know that promoting BTR projects in Portugal is a crucial strategy to tackle the housing access challenge. I also know, from traveling and speaking with many investors at Exporeal every year, that they trust the model, considering its success in countries like Belgium, the Netherlands, Switzerland, and Germany. However, Portuguese legislation in this matter and its tax framework drive most investors away from this option in Portugal.

At the end of June, the new government published in the Diário da República the law that will offer tax breaks on IRS or IRC to those who invest in real estate funds supporting affordable housing. I believe it is a step in the right direction but falls far short of what is needed in this country. A true reform of the tax system and legal obligations binding both landlords and tenants is required to reduce litigation and non-compliance with obligations from both sides, in maintenance and in paying a fair rent, making it a real investment and some help to society, as seen in many other countries. We need a stable and predictable environment, with solid and sustainable policies, to generate confidence and attract more investors to develop these types of projects.

Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes