Construction of houses on rural land in Portugal: what changes in the new law

On Friday, 28 February 2025, the Portuguese Parliament approved amendments to the legislation allowing the reclassification of rural land as urban for housing, with part of it designated for “affordable rental” and “controlled-cost” construction. The decree-law 117/2024, dated 30 December, which modifies the Legal Framework for Territorial Management Instruments (RJIGT) and enables the simplified reclassification of rural land into urban land for housing construction, came into force on 29 January. The law, which will be in effect for four years and applies retroactively to 31 December 2024, now awaits promulgation by the President of the Republic and possible subsequent publication.

During its parliamentary review, amendments to the legislation were approved despite opposition votes from Chega, Iniciativa Liberal (IL), the Communist Party (PCP), the Left Bloc (BE), Livre, PAN, an unaffiliated MP, and one Socialist MP, while another Socialist MP abstained.

Before the final overall vote, the Left Bloc submitted a request to bring proposed changes to the plenary, which had been put forward during the parliamentary discussion of the RJIGT amendment.

However, the proposal stating that reclassification to urban land “cannot include land in sensitive areas, in the National Ecological Reserve (REN) or the National Agricultural Reserve (RAN)” was rejected in the plenary, with votes against from the PSD, CDS-PP, IL, Chega, and the unaffiliated MP, as well as abstentions from the PS and PCP. Additionally, the proposed specification of areas where reclassification is prohibited was also rejected.

What changes in Portugal's so-called land law?

Among the key amendments approved by the PS in agreement with the PSD is the replacement of the term “moderate-value housing” – previously used by the government – with “affordable rental” or “controlled-cost housing”.

The special reclassification regime ensures that at least 700/1,000 of the total above-ground construction area is designated for “public housing, affordable rental,” or “controlled-cost housing” and that “general and local infrastructure exists or is guaranteed”.

Reclassification must also be “compatible with the local housing strategy, municipal housing plan, or housing stock, where applicable.” Additionally, “complementary uses” must be limited to functions that are dependent on or complementary to housing and must not be in conflict with it.

The territorial criterion of “contiguity with urban land, ensuring consolidation and coherence of urban development with the existing urban area” has also been confirmed.

Reclassification of land only outside REN areas

REN area refers to land that is part of the National Ecological Reserve (Reserva Ecológica Nacional - REN) in Portugal. Land reclassification cannot include REN areas such as, among others, coastal protection zones (both land and sea), beaches, salt marshes, coastal and fossil dunes, cliffs, watercourses, lagoons and lakes, reservoirs, and areas at risk of flooding or sea encroachment. The law now also excludes “strategic infiltration and aquifer protection and recharge areas,” areas with a “high risk of soil erosion due to water,” and “unstable slopes.”

Reclassification is also prohibited for “land classified as class A1 or soils classified as class A and B,” which must remain within the RAN (land that is part of the National Agricultural Reserve (Reserva Agrícola Nacional - RAN)). In areas integrated into REN and RAN, measures must be planned and implemented—based on opinions from municipal services or other entities—to “safeguard the preservation of fundamental natural values and functions” and “prevent and mitigate risks to people and property.”

However, during the specialised review, a proposal requiring a detailed technical report—including environmental, social, and economic impact assessments—for reclassification in RAN areas classified as class A, B, C, Ch, D, or E was rejected.

For reclassification, it must be demonstrated how existing infrastructure will be impacted, along with the costs of strengthening and maintaining such infrastructure. Additionally, the “economic and financial viability” must be proven, with an identification of those responsible for funding and “evidence of contractualised funding sources and public investment.”

MPs approved the revocation of the possibility of building housing for agricultural workers outside existing urban areas. However, they rejected a proposal stating that the reclassification of rural land should have an “exceptional nature, limited to cases where no available urban areas exist.”

A 20% increase in the construction index was approved for developments intended for affordable rental or controlled-cost housing. Other approved measures include the requirement for a non-binding opinion from the Regional Coordination and Development Commission (CCDR) regarding land that is not exclusively publicly owned and the mandatory holding of a procedural conference before issuing an opinion.