Housing Documents - New Laws

The recent introduction of purchasing a house without showcasing a license represents a noteworthy evolution in the realm of the licensing simplex, ushering in a fresh set of concerns due to its potential implications if not implemented with due diligence. In contrast to the prior mandate of presenting a usage license at the point of sale, this requirement has now been dispensed with.

This initiative, conceived by the current socialist Government now in administration, aims to augment the housing supply in the Portuguese market, with the primary goals of streamlining transactions, reducing costs, and injecting dynamism into the real estate sector. However, alongside these anticipated benefits, there exist associated risks, including the acquisition of a property without a license, potential illegal constructions, and challenges in securing housing loans.

The streamlining of licensing procedures in urban planning, as outlined in Decree-Law No. 10/2024 dated January 8, is designed to "simplify" the formalities surrounding property transactions. Notably, during the execution of the property purchase and sale contract, the once mandatory presentation or validation of the housing technical file and usage authorization to the notary is no longer obligatory. This measure, effective from January 1, 2024, aligns with the removal of the usage authorization requirement for work subject to prior control.

It is crucial to clarify that this measure does not permit the sale of a house without a license but relieves the obligation to display the usage authorization during the notarization process.

In essence, what was previously a responsibility for sellers until the conclusion of 2023 has now become a concern for buyers. Prospective buyers must now request the usage license for the targeted property before committing to the purchase and sale promise contract, as it may significantly influence their final decision and impact their eligibility for a housing loan.

Professionals in the industry highlight several positive aspects of engaging in property transactions without the obligation to display the usage license:

1. Increased Housing Availability: Properties previously excluded from legal sale due to licensing deficiencies are now accessible to buyers who, despite being aware of this circumstance, do not view it as a hindrance to acquisition.

2. Streamlined Real Estate Transactions: Developers, traditionally hampered by lengthy waiting periods for usage authorizations, can expedite property transactions, avoiding financial repercussions associated with non-compliance with deadlines in purchase and sale promise contracts.

3. Reduced Administrative Costs: The bureaucratic and time-consuming procedures associated with obtaining usage license certificates, along with additional fees and expenses, are eliminated with this measure.

However, the introduction of this new licensing simplex measure also brings forth various risks and disadvantages affecting all stakeholders in property transactions:

1. Reduced Protections for Families and Investors: The simplification and reduction of bureaucracy shift responsibilities to third parties, notably buyers, leaving them comparatively more exposed.

2. Heightened Litigation Risk in Property Sales: There is an increased risk of buyers acquiring properties that do not meet all the legally required requirements for construction and use, potentially leading to legal complications.

3. Compromised Safety Standards: Relaxation of rules and quality construction requirements, including seismic regulations, poses potential risks to the safety of families residing in these properties.

4. Increased Acquisition Costs: The verification of housing compliance, involving licenses and technical files, may be contingent on expensive technical audits, adding to the already substantial costs associated with property acquisition.

5. Challenges in Obtaining Housing Loans: Purchasing houses without a license may pose difficulties in obtaining credit for the property, creating a potential obstacle for buyers seeking housing loans.

In navigating this evolving landscape of real estate dynamics, stakeholders are urged to be mindful of the nuanced implications and strategic considerations accompanying these transformative changes.