enpt

Alert 2 - New law in Portugal penalizes landowners and investors

Over and above the threat of expropriation laws, there is another one. Changes to land laws, sees the removal of building rights from land and farms, with the result that many landowners may see their land being devalued significantly. Many smallholding (quintas) owners may be affected. Read on to find out more ...

The reclassification from "building land" to "rustic land" (Urban to Rural) will have as an immediate consequence the devaluation of land, harming owners, investors, municipalities and families.

This new law is expected to enter into effect on 13 July 2021. This law establishes that land that is currently classified in municipal urban development plans (PDM’s - Planos Directores Municipais), as "building land" will become "rustic land" (Urban and Rural), meaning that construction on that land will be forbidden and no longer allowed. This in turn will result in strong devaluation of these lands as it looses building rights.

Pursuant to article 10 of Law 31/2014, of 30/05/2014 (new law for public land policy - nova lei de bases gerais da política pública de solos), and Article 199 of Decree-Law 80/2015, of 14/05/2015 (new Legal Regime of Territorial Management Instruments - novo Regime Jurídico dos Instrumentos de Gestão Territorial), land classified as "building land" under municipal urban development plans will now be classified, for the most part, as "rustic land", where no construction will be possible or allowed.

In the municipalities where the change has already been made (extinguishing the classification of all other previous land use classification, there is now only "urban land" or "rustic land"), "some previously land with building rights" has been converted into "rustic land" (land with no possibility of building).

For those less familiar with Portuguese terminology for land development, it is important that you understand the difference between "urban land" (solo urbano) - (already has buildings and other infrastructure) and "rustic soil" (solo rústico) - (virgin soil or land that has no buildings or infrastructure in place) in an endeavour that you understand the potential pit falls of this new law on the future building rights in your property.

Building permissions in the new altered "rustic land" definition (land that could previously be developed) can still under very special circumstances, be converted in the future into "urban land/building land" through the use of certain planning instruments (Special Building Application Plans or Execution Plans - Planos de Pormenor ou Unidades de Execução), if they involve specific parcels of land for use in major building development projects (in our interpretation … we expect that they would have to be linked to Projects of National Public Interest).

PIP – (Request for Information - Pedido de Informação Prévia)

According to several architects who were consulted by ASMAA, smaller plots of land or farms may see building applications being conditioned or annulled altogether by this new law. This will certainly mean a drastic reduction in the economic value of land-based properties such as farms and smallholdings.

 

It’s our recommendation that you appoint an architect to request from your local municipality the necessary information relating to building permissions on your land, so that you are up to date on what is happening with your land building rights.

 

This is done by assessing the PDM in your local municipality and see if changes have already been implemented that could affect you, should the “PDM” still being revised, you have a short window of opportunity to safeguard your property building rights by submitting a building application immediately.

 

Our immediate recommendation is that you act now. Submit a building authorization request to your local municipality as soon as possible. Should such authorisation be granted, means that you may have a certain degree of protection in the event of a future dispute with local government bodies.

 

The new law was scheduled to come into effect on July 13, 2020. However, through Law No. 68/2020 of November 5, the government extended this deadline until 13 July 2021, due to the Covid-19 pandemic restrictions placed on the country.

 

One thing is certain, in our opinion, the new Law does not only not serve owners and investors, but also negatively affects local municipalities and families. Urban rehabilitation and regeneration cannot be imposed by decree; it must result from the will of the investors.

In our opinion there are certain aspects to this law, which are unclear, leaving opportunities for land grabbing by unscrupulous and well-connected individuals. You have been warned.

 

 

 

 

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