Banks Won't Lend to Members Aged 55 to 84, a Cohousing Cooperative Warns MPs, as State Credit Lines Wait on the Finance Ministry

A housing cooperative building homes for older people near Montijo told MPs on Tuesday that banks will not lend to members aged between 55 and 84, and urged the government to release credit lines that it says the state development bank, Banco Português de Fomento, already has ready, Observador reported.

Virgílio Rocha, president of A Casa, a collaborative housing (cohousing) cooperative, was speaking at parliament's committee on infrastructure, mobility and housing, at a hearing requested by Chega on cohousing and collectively owned housing cooperatives in Portugal.

The financing gap

A Casa is planning 46 homes on a 14.75 hectare rural plot in Santo Isidro de Pegões, in the municipality of Montijo, priced from 180,000 euros for a studio to 335,000 euros for a two-bedroom home, according to the cooperative. Its architecture has been approved and it is now at the licensing stage.

Rocha said the project can already fund half its own cost, but that is not enough in negotiations with banks, which only offer older members loans of up to 20 years. "With people aged 55 to 84, the banks don't lend," he said. He told MPs that the Banco Português de Fomento had informed the cooperative it had credit lines prepared for exactly this situation, with 30-year terms. "Everything is done," he said; the lines only need authorisation from the Ministry of Finance. He argued that such lending is small and "does not move the needle" on public debt.

In June the bank's president, Gonçalo Regalado, said it would have 500 million euros available this year to finance housing cooperatives.

Tax rules that work against cooperatives

Rocha also asked for two tax changes. People who sell their current home to move into a collectively owned cooperative cannot claim the capital gains exemption for reinvesting in a permanent home, he said, which means "we can only have members who have the money to own two houses".

He also wants the reduced 6 percent VAT rate on housing construction clarified. According to Rocha, the housing institute IHRU does not treat the shared areas of a cohousing project as housing, so they do not qualify. A Casa's 46 homes are deliberately small, he said, with the shared space doing much of the work: a kitchen, laundry, security, a vegetable garden and orchard, rooms for activities, a gym and physiotherapy, hydrotherapy, and medical and nursing care.

Why it matters

Cooperatives are often put forward as one answer to the housing shortage at a time of fast-rising prices; Portugal again led the EU for house price growth in the latest figures. Cohousing for older people answers a specific need: retirees who want to downsize and share care and services, but who are too old for a standard mortgage. If Finance approves the credit lines, projects stuck at the financing stage would have a lender willing to offer 30-year terms; until then, Rocha says, cooperatives like his depend on members who can fund much of the cost themselves.