In Portugal, the building code of each Municipality is specified in the town and country planning instruments, notably, the general plan (Plano Director Municipal), the master plans (Planos de Urbanização) and the (more detailed) detail plans (Planos de Pormenor).
The development of a real estate property may entail several types of urbanistic operations, which must always abide by the applicable town and country planning instruments, including but not limited to (i) plotting (“loteamento”), (ii) infrastructure works (“obras de urbanização”) and (iii) construction works (“obras de construção”), each of these operations requiring the respective administrative approval (being that plotting and infrastructure works are normally encompassed within the same procedure).
Recently, an amendment to the Legal Regime for Urban Planning Instruments (Regime Jurídico dos Instrumentos de Gestão Territorial) has been approved. This amendment focuses essentially on the criteria established for the reclassification of rural land to urban land, particularly when it comes to reclassification for residential and complementar uses, which have been flexibilized. Although this amendment is unlikely to significantly increase the supply of residential properties in the Portuguese real estate market, it can create some opportunities for investors looking into purchasing rural properties and reclassificate them to urban properties to residential purposes.
The present review considers the legal framework currently in force in Portugal as up to date, including the recent impact of a new package or urban and territorial planning measures (the “Urban Simplex”), which was approved by Decree-Law no. 10/2024, from 8 January, with a view to making urban and territorial planning more flexible, as well as introducing simplification measures.
The administrative approval of the urbanistic operations referred above may follow several approval procedures as detailed below.
PIP
Prior to filing a licensing request, it is possible, although not mandatory, to file a previous information request (“PIP”), in order to obtain further certitude regarding the feasibility of the intended project.
A PIP consists of a request addressed to the competent Municipality, asking for the same to pronounce on the possibility of executing a certain project under the applicable town and urban planning instruments. The PIP may be filed in a simplified form (“Simplified PIP”) or already with the envisaged architectural project (“Complex PIP”).
When a Municipality issues a (express or tacit) favourable decision, the PIP becomes binding to the Municipality.
In case of a Simplified PIP this implies that, if a licensing procedure abiding by the exact same terms under which the PIP was approved is filed within two years counted as of the approval of the PIP, the Municipality is bound to approve it.
When a Municipality issues a (express or tacit) favourable decision to a Complex PIP, the developer is entitled to start the construction works without any additional licensing procedure, to the extent the works are started in the 2-year period following the PIP approval.
According to the law, the conclusion of a PIP procedure should take 40 to 50 business days (including the consultation of external entities), and the absence of answer triggers the tacit approval of the PIP. This notwithstanding,In practical terms and according to our experience, said conclusion may take 3 to 6 months (or more, depending on the complexity of the project and depending on the Municipality in question). In any case, deadlines may vary from Municipality to Municipality and, therefore, confirmation of each Municipalities practise is recommended.
Construction License and Previous Communication
The applicable law currently foresees two types of administrative procedures entitling the execution of urbanistic operations (including: plotting and infrastructuring, construction of new buildings and modification of existing buildings).
With the aim to standardize licensing procedures with the municipalities, Urban Simplex introduced several chances to the applicable law and determined that it will no longer be possible for municipalities to ask (or include in their internal regulations) for documentation which is not foreseen by law. This list of documentation required for initiating urban planning licensing procedures is foreseen in the legal ordinance 71-A, of 27 February (Portaria n.º 71-A/2024).
Furthermore, Urban Simplex determined that, up to 5 January 2026, all municipalities will be obliged to utilise the same unified electronic platform for the main procedures regarding licensing (for purposes of consultation, submission, notification, certificate obtention, etc).
License:
According to the law, the conclusion of a licensing procedure should take about 3 months (including the consultation of external entities) to be concluded. However, in practical terms and according to our experience, said conclusion may take 12 to 24 months (or more depending on the complexity of the project and depending on the Municipality in question). In any case, deadlines may vary from Municipality to Municipality and, therefore, confirmation of each Municipalities practise is recommended.
The recently approved Urban Simplex determined that, for licensing procedures initiated after 4 March 2024, in case the competent authorities do not issue a decision regarding the issuing of the construction permit within the legally foreseen deadline the license will be deemed as issued and it will be possible for developers to start the construction works. Additionally, the construction permit title was replaced by the proof of receipt of payment of the charges due to the Municipality. Upon conclusion of a licensing procedure, the Municipality shall issue the construction license, according to the standardize model approved by legal ordinance 71-B, of 27 February (Portaria n.º 71-B/2024).
Furthermore, Urban Simplex has put an end to (i) the public space occupation permit (OVP), being so that this matter will be addressed, considered and included together in the construction permit procedure, and (ii) the need for an opinion from the relevant cultural heritage authority in several situations in which this opinion was required.
Previous Communication (which consists of a mere prior communication to the Municipality before initiating the urbanistic operation):
The specific situations where a Previous Communication is admissible by law are situations in respect of which the degree of control by the Municipality may be lower.
Notably, the Previous Communication is allowed in situations where the parameters and requisites applicable to the urbanistic operation were previously established and approved by the Municipality with a high degree of detail (e.g. infrastructing or construction in areas covered by a plotting approval or by a detail plan, works in consolidated urban areas compliant with the Municipal plans and that do not exceed certain limits, or works complying with the exact terms of a PIP that has been approved).
The Previous Communication is filed with declarations signed by the architects and technicians responsible for the technical projects attesting that the urbanistic operation fully complies with the applicable rules, such declaration implying personal liability from the signatories.
Urban Simplex has added several situations to the list of situations in the which previous communication procedure is applicable (with the consequent exemption from obtaining a planning license). Futhermore, if the law provides that the planning procedure shall be the previous communication, then it will no longer be possible for the developer to opt for a licensing procedure.
Municipal Use Permit
In Portugal, the use of any real estate asset was generally subject to obtaining a Municipal Use Permit, which was the document that attested that a certain construction was built in accordance with the approved construction license and states the respective authorized use.
The existence of an appropriate valid Municipal Use Permit in respect of each property was also a requirement for the execution of any agreements implying the transfer of any such properties (asset deal).
As a result of Urban Simplex, the municipal use permit will no longer be necessary in case the project has been subject to the licensing or previous communication procedures. In these cases, the use permit is replaced by the delivery of the relevant documentation to the competent municipality, with no possibility of refusal by the municipality. The relevant documentation to be filled with the municipality is (i) the statement of liability signed by the construction manager or the construction supervision manager attesting that the works were terminated and comply with the approved project and (ii) the technical drawings (in the event of alterations to the project). This list of additional documentation required to be submitted is foreseen in the legal ordinance 71-A, of 27 February (Portaria n.º 71-A/2024). Note that the property can be used for its intended purpose immediately after these documents have been submitted.
Upon receiving the documentation identified above, the Municipality shall issue an answer confirming the permitted use according to the standardize model approved by legal ordinance 71-B, of 27 February (Portaria n.º 71-B/2024).
Furthermore, when a given project is not subject to any previous control procedure, the use of the building or unit will need to be preceded by the submission of a previous communication accompanied by a statement of liability declaring (i) the conformity of the intended use with applicable laws and regulations and (ii) the suitability of the building or unit for the intended purpose. In the event the Municipality fails to respond within 20 business days (period in which the Municipality may order an inspection to be carried out), the building or unit may be used for the intended purpose. A similar procedure should be adopted if a developer wishes to change the use of the building or unit, or any other information contained in the use permit.