Parliament to approve changes to controversial Land Law
The amendments limit rural-to-urban reclassification exclusively to public housing, affordable rental units, or controlled-cost housing and removing the controversial “moderate value” concept.
The main parties in Parliament have reached an agreement on amendments to the Government’s land-use law, which will simplify the reclassification of rural land into urban areas for housing development.
The revised law, which will be in effect for four years, will face a final vote in today’s plenary session of the Assembly of the Republic, with certain approval by the Government’s coalition (AD) and the Socialist Party (PS), before heading to the President for approval or veto.
The amendments to be voted today limit urban-to-rural reclassification of land exclusively to public housing, affordable rental units, or controlled-cost housing, removing the controversial “moderate value” concept that had sparked criticism for allowing homes to be sold above market prices.
Read PORTUGAL DECODED’s previous coverage of the issue HERE, HERE, HERE and HERE.
Process
At stake is the Decree-Law 117/2024, of December 30, which amends the Legal Framework for Territorial Management Instruments (RJIGT), allows rural land to be reclassified into urban land for housing.
The decree-law came into force on January 29 but faced parliamentary scrutiny following opposition from Bloco de Esquerda (BE), the Communist Party (PCP), Livre, and PAN.
These parties sought to overturn the law, but their efforts were blocked by PS and Chega, who sought instead to introduce a series of modifications.
During the parliamentary negotiations, the Socialist Party (PS) and the Social Democratic Party (PSD) succeeded in passing several of their proposed changes, while most amendments from other parties were rejected.
The Government agreed to incorporate several of PS’s demands to secure support for the legislation.
Key changes
Under the new rules, at least 70% of newly reclassified land must be allocated to public housing, affordable rentals, or controlled-cost housing.
Additionally, per a PSD-backed amendment, controlled-cost housing designated for rental may be transferred to new owners, provided it remains dedicated to low-cost housing.
Changes were also made to the procedures for land reclassification. Despite PSD’s opposition, PS successfully pushed for a requirement that any reclassification proposal must include a financial viability assessment, details of funding sources, and an analysis of urban infrastructure capacity.
The law will also reinstate territorial continuity as a key criterion for land reclassification, aiming to prevent urban sprawl.
However, a PS proposal to limit reclassification only to cases where no urban land is available was rejected.
Implementation Timelines
Initially, the law required urbanization and construction projects under this framework to be completed within five years, extendable by at least half the original timeframe (over seven years total).
PS proposed reducing this to three years, extendable by 50% (4.5 years total), but the amendment was rejected. Instead, a PSD-backed four-year deadline, extendable by one year, was approved.
Additionally, PS secured an amendment requiring that reclassification of private land be subject to a non-binding review by the respective Regional Coordination and Development Commissions (CCDR, there are five in Portugal: North, Centre, Lisbon and Tejo Valley, Alentejo and Algarve), ensuring compliance with existing legal and territorial planning frameworks. This means that the final decision won’t be left to the municipality alone.
Regarding protected areas, PS successfully expanded restrictions on land reclassification to include regions with high groundwater infiltration, erosion risks, and unstable slopes, despite PSD opposition.
Finally, a time limit was set on the new law: it will remain in effect for four years, with a possible extension based on its impact assessment. The law will be retroactively applied from December 31, 2024.
So, can I build a house on my rural land?
The law does not explicitly prohibit this, but the amendment’s intent seems to lean toward multifamily buildings, particularly by requiring the creation of infrastructure when it is lacking.
References to “housing projects that meet the needs of vulnerable populations and promote balanced social integration” point in the same direction.
Whether the owner is private or public, the “Land Law” has certain distinctive nuances in the process of converting rural land into urban land.
In both cases, the proposal must first be approved by the local government, and once validated, it goes to the Municipal Assembly for approval.
If it passes these two levels of scrutiny, the process will then be submitted to the Regional Coordination and Development Commission (CCDR) for the relevant area, whose opinion is non-binding and should be issued within 20 days.
If the rural land belongs to public entities, consultation with the CCDR is not required.
President’s reaction
The amendments will now face a final vote in Parliament before being sent to President Marcelo Rebelo de Sousa, who may sign them into law or issue a veto.
The President had previously approved the original decree-law but acknowledged it posed “significant challenges” to national and local land-use planning policies.
This week, President Marcelo expressed concern over the pressure the new land law places on local governments just months before the upcoming elections.
According to ECO, the head of state revealed that several mayors have warned him about the burden they now face in deciding whether to reclassify rural land as urban, a process that ultimately requires approval from municipal assemblies.
Marcelo emphasized that while there is urgency in allocating funds for public housing under the Portugal 2030 program, the land law shifts responsibility to municipalities, distancing the government from the decision-making process.
“Which mayor feels comfortable making these decisions so close to an election?” the President reportedly asked.