Simplification in real estate transactions in Portugal: what changes

The measures proposed by the Portuguese Government for parliamentary approval are bold, with a view to simplifying processes in urban development operations and in the execution of real estate transactions. 

It is important to understand what changes and to anticipate the impact of these reforms on the relationship among economic agents and the relations with the public authorities in the real estate sector.

In its preamble, the Government recognizes that Portugal still faces difficulties in its business environment which undermine the country's competitiveness and affect its attractiveness for investment. The excessive barriers that we maintain in the licensing of business activities and projects have been pointed out by international institutions such as the European Commission and the OECD as obstacles to competitiveness, investment and economic growth in Portugal. 

Within this context, Portugal has included a reform in its Recovery and Resilience Plan (RRP) that aims to reduce the burdens and complexities that inhibit business activity. One of the axes of this component of the RRP aims to lessen the administrative and regulatory burden faced by companies, by reducing sector obstacles to licensing that have no justification.

Following the recent reform that simplified procedures in environmental matters, the Government is now proposing legislation in the areas of urban planning and real estate transactions (Draft Law nº 77/XV). The Government’s proposal considers the following measures, among others:

• Exemption or waiver of construction license

The cases for an exemption or waiver of the license for carrying out building works are extended, namely, when there is a detailed plan, implementation unit, plot allocation or prior information (Project Implementation Plan) that meet certain conditions.

• Tacit approval of the license applications 

Tacit approval of the construction license, including online certification, when the licensing entity has not issued a decision within the legally established deadlines.

• Removal of the construction license

Replaced by the receipt of payment of any fees due, following the licensing record (final approval) when required.

• Removal of the authorization for use and corresponding permit

Removal of authorization for use, replacing it with mere prior communication (simple delivery of documents).

• Removal of the requirements for the sale and purchase of properties 

Removal of the need to verify the existence of an authorization for use, a technical habitability specification sheet and a statement regarding the existence of debts in respect of the condominium of owners, in order to conclude agreements for the sale and purchase and sale of properties.

These are undoubtedly measures that could help unlock projects and investments and reinforce the market placement of properties the transferability of which by their current owners is impaired due to the legal requirements in force.

As has happened so often in the past, unfortunately based on poor experiences, the challenge will be to ensure that the participation and response of the various public entities to these simplifying measures is, in administrative practice, in line with the objectives set out by the legislators. If anything changes, then, for once, do not look for a way to ensure that everything will stay the same, according to Lampedusa's “maxim” in “Il Gattopardo”.