Tax incentives for municipalities and regions aimed at the strengthening of social housing are provided by the draft law of the Ministry of Social Cohesion and Family.
As the government sets in motion the action plan of the “National Strategy for Housing Policy (2026-2035)”, local government is at the center of this effort.
The draft law, which is under public consultation until Friday, aims at increasing the housing supply through the utilization of existing but unused properties.
In article 53, the bill seeks to strengthen social housing programs as well through tax incentives.
“From tax year 2026 onwards, 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 properties that are included in social rental programs is exempt from income tax, for as long as the lease or sublease lasts,” the bill states.
Change of use
Another important point of the bill concerns the change of use of properties, providing the possibility of conversion of old commercial or other buildings into residences, in accordance with the provisions included in Chapter D of the bill.
Article 55 opens the way for the change of use of existing lawful buildings into residences. In fact, the conversion may exceptionally take place even in areas where the current land uses do not permit housing.
The provision concerns both properties within the city plan or within settlement boundaries and outside the plan, setting different conditions depending on the category of the property.
Also noted is a significant intervention regarding out-of-plan properties. The bill allows the change of use of lawfully existing buildings into residences even when the special building terms, local or special urban plans, land uses, or other spatial planning regimes do not provide for housing.
“The change of use to residence is permitted only once, concerns exclusively all or part of the lawfully existing shell of the building, and does not entail, under any circumstances, an increase in volume, building area, or coverage” it is emphasized in the bill.
At a 5% compensatory fee
In a sector that is likely to attract significant capital, yet another source of revenue for the state is being introduced.
“Before the issuance of a building permit for development of the new residential use, a positive opinion of the Central Council of Architecture is required. A prerequisite for the approval of the change of use is the payment of a special compensatory 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 applicable system of objective value determination”, the bill underlines.
Can municipalities do it?
This is an important step, however, it is worth wondering to what extent municipalities are ready to take on a greater role.
According to new data published yesterday, only 25% of the properties owned by municipalities can be utilized immediately for the country's housing needs.
In its new analysis, BluPeak Estate Analytics states that out of every 100 municipal properties, only 25 can be utilized immediately. Another 40 require technical, administrative, or legal maturation, while 35 show serious pending issues, incomplete data, or utilization restrictions.
“The conclusion is clear. The existence of a property does not mean that it is available, clear, mature, or exploitable. This dimension acquires even greater significance at a time when the country is intensely discussing the housing crisis”, the analysis notes.
“There are Municipalities that show thousands of rights in the Cadastre, but a much smaller number of properties in the E9. There are Municipalities that have declarations in the E9, without a correspondingly complete picture in the Cadastre. There are also cases where the services of a Municipality themselves do not have a common database for the property they manage”, BluPeak Estate Analytics adds.