Francisco Cabral Matos was quoted by Jornal de Negócios in an article on the housing tax package presented by the Government, which aims to encourage investment in affordable and mid-market rental housing, as well as reduce the tax burden applied to residential leases.

Regarding the incentives directed at funds investing in affordable housing, the VdA Head Partner of the Tax Practice highlighted that the underlying intention of the measure is positive, as it seeks to shift the investment profile of real estate funds. However, he warned that its effectiveness may be compromised: 'The measure aims to promote a shift in the investment profile of funds, from a build-to-sell approach to affordable and mid-market rental housing. But its complexity undermines its effectiveness and may result in limited impact.'

He also noted that, despite the appeal of a reduced personal income tax rate for investors, the real benefit depends on a complex mechanism that is highly sensitive to factors difficult to control: 'The ‘nominal’ tax incentive is very attractive, particularly for domestic savers. However, the calculation formula is complex and relies not only on charging moderate rents but also on the composition of the fund’s assets, which may cause the benefit to fluctuate from year to year.'

The article also addresses the proposed personal income tax reduction for landlords charging rents of up to €2,300 — considered a positive step, though insufficient to resolve the structural constraints limiting supply. On this point, he observed that current long-term rental incentives do not reflect market realities: 'Today’s long-term rental incentives are unrealistic. To benefit from a 10 % tax rate, a landlord would need to enter into a lease of more than ten years, which is rarely a feasible option.'

He further identified measures that could have a more direct impact on the decision to invest in residential leasing: 'Other measures would have a more significant impact, particularly those relating to deductible expenses, such as construction or rehabilitation costs for rented properties, as well as financing costs.'

• This article is available here.