Public Guarantee for Housing Loans for Individuals Up to 35 Years in Portugal

On the 11th of July 2024, Decree-Law No. 44/2024 was enacted, becoming effective the following day. This decree-law introduces new provisions enabling the Portuguese state to offer personal guarantees to financial institutions, thereby streamlining the credit approval process for individuals seeking to purchase their first real estate for primary and permanent residence.

This guarantee made by the Portuguese government is exclusively available to taxpayers aged 35 and under.

Please note that the implementation of this measure requires further regulation by government officials responsible for finance, housing, and youth fields. These regulations must be established within sixty days from the date the decree comes into effect, with a final deadline of the 10th of September 2024.

The aim of this public guarantee is to facilitate younger taxpayers in acquiring their first home, mitigating the challenges posed by the significant rise in property prices in recent years. This measure is designed to ease the path to homeownership, particularly for those in this age group.

For this public guarantee to be accessible, specific conditions must be met by the young taxpayers, including:

• Age: The applicant must be between 18 and 35 years old. 
• Income: The maximum income allowed is within the 8th tax bracket, which corresponds to an annual taxable income of up to 81,199 euros.
• First Housing: The individual must not own any other property or share in an urban building. Cannot be a homeowner.
• Price Limits: The property’s purchase price must not exceed 450,000 euros.
• State Guarantee: The Portuguese state’s guarantee cannot exceed 15% of the property’s purchase value.
• Single Use: Each taxpayer can only benefit from this state guarantee once.
• Purpose: The guarantee must enable the financial institution to finance the entire purchase price of the real estate.

This is not the first initiative the Portuguese government has implemented to address the housing crisis, particularly for younger taxpayers. Previous measures include a reduction in personal income tax deductions by up to 15%, applicable regardless of income level, aimed at alleviating the financial burden on young taxpayers. 

Another measure already in place for young taxpayers is the exemption from IMT and stamp duty tax on the purchase of their first home, as long as it is intended for primary and permanent residence.

These measures are integral to the Portuguese government’s “Construir Portugal” initiative. It is a strategic package introduced to address the ongoing housing crisis. This comprehensive programme encompasses 30 distinct measures targeted at alleviating housing challenges and supporting the acquisition of primary residences.

If you have any questions regarding real estate acquisition or require legal advice in this area, please do not hesitate to contact us. Our team is prepared to provide expert guidance and support.