Changes to controlled-cost housing regime

2025-07-14T13:11:00
Portugal
Adjusted parameters for calculating promotion costs of controlled-cost housing and procedures for public procurement
Changes to controlled-cost housing regime
July 14, 2025
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Context and objectives of amendment to controlled-cost housing regime

Ordinance 265/2025/1, published on July 11, 2025, introduces the third amendment to Ordinance 65/2019 of February 19, regulating the controlled-cost housing (“CCH”) regime.

This update follows earlier amendments made by Ordinance 69-B/2024 of February 23, as highlighted in our Legal Flash Regulating affordable rentals and controlled-cost housing, published on February 28, 2024. This recent update, in particular, addresses the need to adjust parameters used to calculate promotion costs for CCH units. Specifically, this adjustment aims to account for construction cost increases, land value escalation and energy demands, with a focus on urban rehabilitation areas and public procurement procedures.

Key amendments

The table below compares the key amendments introduced by Ordinance 265/2025/1 of July 11 to Ordinance 65/2019 of February 19, as amended by Ordinance 69-B/2024 of February 23:

 

Ordinance 65/2019, as amended by Ordinance 69-B/2024

Amendments introduced by Ordinance 265/2025/1 of July 11

Formula for calculating promotion costs

CP = CS * 1.30 * CR * CO + VT * CT

VT = (CL * 270 - 230) * CA / 100

CS: Reference cost per m²

CR: Regional coefficient (1 on the mainland and 1.20 in autonomous regions)

CO: Operational coefficient (1–1.12)

VT: Land value

CT: Land ownership coefficient (1 or 0–0.8 for surface rights)

CL: Location coefficient

CA: Land value update coefficient

Retains the same base formula with the following adjustments:


CS: Increased by 10% for projects in urban rehabilitation areas (“ARUs”)

 

 CO: Expanded range of 1–1.20 (previously capped at 1.12)

 

 

 


CL: Set at a minimum value of 1

Promotion cost increase for public works contracts

Not specified.

Article 8-A (new):

Up to 20% promotion cost increase for CCH projects awarded under article 70.6 of the Public Contracts Code (“PCC”) (excluding all bids for exceeding the base price and an exceptional award).

The new increase of up to 20% of the promotion cost aims to ensure the viability of public projects in exceptional market situations, enabling awards to be made even when all bids exceed the base price.

Temporal scope

Applicable to certification processes submitted following the entry into force of Ordinance 69-B/2024 (February 24, 2024).

Applicable to certification processes submitted following the entry into force of Ordinance 265/2025/1 (July 12, 2025),

as well as to previously certified processes whose works have been or will be awarded under article 70.6 of the PCC.

Therefore, the promotion cost increase in article 8-A can be applied to processes that have already been certified, provided the works are awarded under the exceptional terms established in the PCC.

  

Summary of amendments

  • Reference cost increase in ARUs:
    The reference cost (“CS”) per square meter increases by 10% for projects in ARUs to account for higher costs in these areas.
  • Higher ceiling for operational coefficient (“OC”):
    The OC range, set by the Housing and Urban Rehabilitation Institute (“IHRU”), now has a ceiling of 1.20 (previously capped at 1.12), ensuring flexibility to accommodate actual promotion costs.
  • Promotion cost increase for public works contracts:
    The possibility is introduced to increase the promotion cost by up to 20% for CCH contracts awarded under article 70.6 of the CC. This applies when all bids submitted in a public tender exceed the base price due to the evolution of costs.
  • Scope of new rules:
    The amendments apply to certification processes submitted after Ordinance 265/2025/1 entered into force (i.e., July 12, 2025). They also apply to previously certified projects if the contract was or will be awarded under article 70.6 of the PPC.

Unchanged aspects of the CCH regime

Certain elements remain unchanged by the amendments introduced by Ordinance 265/2025/1, including the following:

  • Base formula for CP:

    The formula remains unchanged:
    CP = CS * 1.30 * CR * CO + VT * CT
    VT = (CL * 270 - 230) * CA / 100
    The increases are now established for ARUs and exceptional public contracts.

  • Updating the CS:
    The CS continues to be updated monthly based on the construction cost index for new housing (Portuguese National Statistics Institute).
  • Regional coefficient (“CR”):
    No change: 1 for the mainland; 1.20 for Madeira and the Azores.
  • Location coefficient (“CL”) and updating coefficient (“CA”):
    CL set by article 42 of the Municipal Property Tax Code (minimum value of 1); CA corresponds to the Housing Price Index for Portugal.
  • Certification rules and tax benefits:
    IHRU certification is still needed to apply the reduced VAT rate and other tax benefits.
  • Maximum gross area limits by type:
    The maximum gross area limits by type (from studio to five bedrooms) established in Ordinance 69-B/2024 remain in force.
  • Rules for affordable rentals:
    CCH intended for rental is still subject to the maximum rental prices established by Decree-Law 68/2019 of May 22, and the respective certification.

For further information on the CCH legal regime, see our previous Legal Flash published on February 28, 2024: Regulating affordable rentals and controlled-cost housing.

July 14, 2025