Construction on rural land "still requires the VAT incentive at 6%."

The possibility of reclassifying rustic land to allow for housing construction - taking advantage of lower land costs - is welcomed by the industry but also requires a VAT reduction to 6%, warns the sector. Additionally, the measure demands "high transparency," with processes remaining notably slow. This new policy, aimed at boosting housing construction, was approved last week by the Council of Ministers.

 

Eduardo Gonçalves Rodrigues, partner in the Real Estate, Tourism and Urban Planning at SÉRVULO, highlights: "In the case of reclassified rustic land, the price is not as susceptible to speculation as already consolidated urban land." However, he cautions: "Builders might be tempted to compromise on construction quality to increase profit margins" or "inflate the 30% [not subject to price caps] to compensate elsewhere."