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Municipalities May Charge Punitive IMI Rate on Vacant Properties
6 May 2019 – Richard D. K. Turner
The President of Portugal, Marcelo Rebelo de Sousa, enacted legislation allowing for punitive IMI tax (municipal property tax) rates on vacant buildings in areas suffering from pressures due to a lack of housing, even though critics have raised doubts regarding the measure’s efficacy.
According to an article in the Diário Imobiliário, the new law creates rules for defining areas considered to be under “urban pressure.” They include areas where demand significantly outstrips supply and areas where housing prices exceed the purchasing power of residents.
Municipalities can now place punitive IMI rates where any building in such areas remains vacant for more than one year. Local authorities may increase the tax rate six-fold in the second year, and by a further 10% per year thereafter.
Portugal’s president also enacted other laws regulating the housing sector, including one giving increased powers to municipalities to intervene to upgrade vacant or degraded buildings and place the property in the rental market until it can recover any related costs. A third law granted a complete exemption for property owners placing their assets in the affordable housing market, as long as they set the rental contract is a period of at least five years, charge a rent that is set at least 20% below the prevailing market rate and charge the lessee at a rate that does not entail more than a 35% effort rate.
Original Story: Diário Imobiliário / LUSA