126
126

Discounted Urban Planning Taxes to End in Downtown Porto

7 June 2018

Developers and real estate investors have been criticising the high rates of urban planning taxes in Porto. The Municipality of Porto is aware of the situation, but given the recent dynamism the real estate and construction sectors, it is preparing to end discounts to urban planning taxes in the city’s downtown.

The Porto city council member for Urbanism, Pedro Baganha, confirmed this Wednesday (June 6) that “taxes are expensive.” In an event held by Vida Imobiliária, which brought together several real estate managers in a breakfast attended by idealista/news, the politician went on to say that the “bad news” for some of those present is that “the municipality’s urban planning department has already begun a review of the taxes, including those related to city planning, and are studying the end of reductions to the downtown public domain occupation rates.”

Pedro Baganha believes that, considering the heady growth in the construction sector, that it no longer makes sense to “discount” urban taxes in the downtown area.

Municipal incentive to encourage rehabilitation

“The reduction of 80% in the taxes due to the licensing for occupation of the public domain for to works directly related to construction, reconstruction, conservation, rehabilitation or regeneration of the existing property located in the ACRRU (Article G / 16 n. 1 a) of the Porto Municipal Regulatory Code,” was one of the incentives created by the municipality to boost urban renewal in the city centre.

“I think this situation is allowing the builders to perpetuate situations, such as the ones that are happening in Rua das Flores,” Pedro Baganha warned, drawing attention to several projects that started construction, but which are have now halted.

Increase construction next to Metro

For an audience that was interested to learn about any news regarding the new PDM (Municipal Directorial Plan), but very critical regarding the burden of urban taxes and VAT (at 23%) – which currently account, in Rui d ‘Avila’s opinion, a member of the board at Ferreira Construções, for “8% of project development costs,” – the politician presented some potentially good news that is included in the review.

The objective is to increase the city’s construction index, particularly in the new zones next to the surface Metro, from 0.8 to 1.2-1.4. This increase also is expected to be extended to the new development zones, especially in the parishes of Ramalde and Campanhã.

In the opinion of the councilperson in charge of urban planning, the review will correct the injustices of the previous PDM in 2006, since it “made life easier for those who wanted to rehabilitate and harder for those who wanted to build.” “A successful strategy,” but one that does not make sense now, he said.

The location of new developments next to the Metro has a declared objective of reducing the use of individual transport, since the intention, in the short term, is to turn the city centre and the historical zone into a pedestrian zone.

Increase the population of the city

Pedro Baganha believes that the principal challenge of the new PDM is to increase the population of the city of Porto. These days the city has about 220-230,000 inhabitants – the exact number is not yet known, but the number is stabilising, – “our ambition is to place Porto among Europe’s medium-sized cities”, he added.

Therefore, the objective of the new PDM, which is expected to be in force until 2030, is to reinforce the central role of Porto by focusing on job creation, incentivising start-ups, especially in the knowledge economy, and in establishing a younger population.

Although the main guidelines for the future development of the city – which will be followed by public discussion and approval – are still under study, the legal deadline for the entry into force of the new PDM is 2021. However, Pedro Baganha is optimistic and hopes that the measures will be valid by the end of 2019.

Original Story: Idealista – Elisabete Soares

Translation: Richard Turner