Porto Council Weighs Revoking a Vote That Let Seven Developers Pay Cash Instead of Providing Affordable Homes, and Proposes Ending the Option

Porto City Council may reverse a decision, taken a week ago, that let seven property developers pay the city a cash sum instead of providing affordable rental homes. The council's governing majority under mayor Pedro Duarte (PSD, CDS-PP and IL) said on Monday that it would invite opposition councillors to a meeting with municipal staff and then "consider revoking" the decisions.

It also announced a rewrite of the rules behind them. Under its proposal, developers would no longer be able to pay cash in place of affordable housing, hotels and holiday lets would have to contribute affordable homes, and residential projects would be exempt.

What was decided on 20 October

Porto's Plano Diretor Municipal (PDM, the municipal master plan), in force since 2021, includes "inclusive zoning" for an area of the city centre. Developers of projects there, such as hotels and alojamento local (holiday lets), must set aside floor space for homes let at affordable rents. The Regulamento Perequativo de Edificabilidade e de Encargos Urbanísticos (the municipal regulation on building rights and planning charges) allows an exception: if a developer shows that housing cannot be provided on site and there is no alternative within the zone, it can ask to pay financial compensation instead.

On 20 October the council executive approved such requests for seven projects, by seven votes to six, according to Lusa, as reported by Notícias ao Minuto. Público reported that the city will receive 1.39 million euros in all, 88 percent of it from three companies: PM29 Real and Ateneu 33 Real, Lisbon-based property firms owned by the Luxembourg-based Crystal Holding, and Historical Porto Offices, owned by businessman Mário Ferreira. Together those three should have provided 2,937 square metres for affordable housing; instead they will pay 1.23 million euros, an average of 418 euros per square metre.

The opposition's case

The Socialist councillor Manuel Pizarro called the decision "manifestly illegal" on Monday morning, as well as "politically wrong" and "morally reprehensible", according to Lusa. He said it swapped about 40 affordable homes in the city centre for a sum that would let the council provide only four or five homes in the same area, and that it runs against the aims of the PDM. The PS has announced an extraordinary session of the Assembleia Municipal (municipal assembly) on 9 November to debate the case. Público reported that a lawyer, Joaquim Oliveira, has sent a complaint to the prosecutors' investigation department (DIAP).

The council's answer

The majority's statement, quoted by Lusa in Observador, rejects any illegality and calls the PS approach "alarmist". It invites the PS and Chega councillors to a meeting with the municipal services, open to the press, to go through the seven cases. "If, at the end of that meeting, the PS still insists that this alternative is viable, the mayor undertakes to put forward a proposal to revoke the decision taken at the last council meeting," it says. "The difficulty of access to housing in the country is not compatible with doubt about the clear intention of Porto's municipal bodies to invest in housing, in particular in the city centre."

The council also argues that the scheme has not worked: "Since the regulation came into force in 2021, no home has been built or allocated to affordable rent under this regime."

What the proposed rewrite would change

The majority will take a draft amendment to the regulation to the next council meeting, and it would then go out to public consultation. As the council describes it:

• no more cash in lieu: the option of paying financial compensation instead of providing housing would end;
• hotels and holiday lets would be required to contribute affordable housing in the zone;
• residential projects would be exempt from both the housing contribution and the compensation, which the council calls a deterrent that "increases investment and construction costs" and so, foreseeably, the final price of homes;
• shops and services would stay under the current rules;
• the area where the affordable homes can be provided would be widened to the whole zone of urban pressure identified in Porto's Carta Municipal de Habitação (municipal housing charter).

The changes are a proposal and need the council's approval, consultation and a final vote before they apply. Porto has also backed a 331-home build-to-rent project in Campanhã, and in June stripped 1,413 holiday-let licences over missing liability insurance. At national level, the government is studying whether private partners should build affordable rentals on state land.