The draft bill from the Ministry of Social Cohesion and Family provides tax incentives to municipalities and regions with the aim of strengthening social housing.
As the government moves forward with the action plan “National Strategy for Housing Policy (2026–2035),” local governments are at the center of this effort.
The draft bill, which is open for public comment until Friday, aims to increase the housing supply by utilizing existing but underutilized properties.
In Article 53, the bill also seeks to strengthen social housing programs through tax incentives.
“Starting with the 2026 tax year and thereafter, the income earned by municipalities, regions, their legal entities—and in particular Local Government Development Organizations— as well as non-profit legal entities under public or private law, from the leasing or subleasing of real estate included in social rental programs, shall be exempt from income tax, for the duration of the lease or sublease,” the bill states.
Change of Use
Another important provision of the bill concerns the change of use of real estate, allowing for the conversion of old commercial or other buildings into residential properties, in accordance with the provisions included in Chapter D of the bill.
Article 55 paves the way for the change of use of existing legally constructed buildings into residential properties. In fact, such conversions may be permitted on an exceptional basis even in areas where current land-use regulations do not allow for residential use.
The provision applies to properties both within city plans or settlement boundaries and outside such plans, setting different conditions depending on the property category.
Furthermore, a significant change is introduced for properties outside city plans. The bill allows for the change of use of legally existing buildings to residential purposes even when specific building regulations, local or special urban planning schemes, land-use designations, or other spatial planning regimes do not provide for residential use.
“The change of use to residential is permitted only once, applies exclusively to all or part of the legally existing building shell, and does not, under any circumstances, entail an increase in volume, floor area, or coverage,” the bill emphasizes.
A 5% reciprocal fee
In a sector likely to attract significant capital, yet another source of revenue for the state is being introduced.
“Prior to the issuance of a building permit for the development of a new residential use, a positive opinion from the Central Council of Architecture is required. A prerequisite for approval of the change of use is the payment of a special fee equal to five percent (5%) of the objective value of the land corresponding to the property, as determined at the time of submission of the relevant application, in accordance with the current system for determining objective values,” the bill emphasizes.
Can the municipalities handle this?
This is an important step; however, it is questionable whether municipalities are ready to take on a greater role.
According to new data published yesterday, only 25% of the real estate owned by municipalities can be immediately utilized to meet the country’s housing needs.
In a new analysis by BluPeak Estate Analytics, out of every 100 municipal properties, only 25 can be utilized immediately. Another 40 require technical, administrative, or legal preparation, while 35 have serious outstanding issues, incomplete data, or restrictions on their use.
“The conclusion is clear. The mere existence of a property does not mean that it is available, unencumbered, ready for development, or viable for development. This aspect takes on even greater significance at a time when the country is engaged in intense debate over the housing crisis,” the analysis notes.
“There are municipalities that list thousands of property rights in the Land Registry but a much smaller number of properties in the E9 form. There are municipalities that have entries in the E9 form without a corresponding complete record in the Land Registry. There are also cases where a municipality’s own departments do not share a common database for the property they manage,” adds BluPeak Estate Analytics.