Local Housing Strategy

Faro Municipality
2018-2025
 INDEX

1 - Introduction

2 - Evolution of the county

a) Territory
b) Population
c) Socio-economic characterisation of the population
d)Recent economic dynamics
e) Local Accommodation
f)Housing stock
g)Real estate market
h) Urban Rehabilitation Areas
i) The University of Algarve
j) Overall assessment

3 - Social housing in the municipality of Faro

a) History
b) Existing social housing
i. Income
ii. Maintenance programme for social housing in Faro
iii. Disposal of real estate
c) Housing needs already identified

4 - Lines of action

5 - Financing

6 - Execution timetable

7 - Final Note

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1 - Introduction
The municipality of Faro has several very particular characteristics and dynamics
about its housing stock.

On the one hand, concerning the municipality's housing stock, intended for social
or emergency housing, there has been no new supply since the end of 1990, for
some 28 years.

In 2006, housing at controlled costs was made available to the municipality's

residents.

As for private investment in the construction sector, it stagnated almost a decade

ago due to the solid international financial crisis that significantly impacted our
country, namely in the construction and real estate sectors.

Thus, there was no investment in municipal housing, largely due to the financial
difficulties that the Municipality went through in the last decade, which even led to
its integration in a financial assistance programme (PAEL - Programa de Apoio à
Economia Local), which was in force between April/14 and March/17, and dictated
harsh operating rules. On the other hand, the private sector also did not invest in
the construction of new homes, as a result of the crisis that had effects at the level
of lack of liquidity in the economy, high-interest rates on housing loans and lack of
confidence of investors and consumers, halting investment and consumption.

Today, the scenario has changed. The national and international conjuncture
favours consumption and investment. The municipality is free from the PAEL
straitjacket, allowing it to manage its finances and decide where to invest
according to the priorities and needs of the citizens of Faro.

And at the structural level, Faro gathers equipment and characteristics that make
the county unique in the national framework. Facilities such as Faro airport, the
commercial port, rail and road infrastructures, the University of the Algarve - an
important centre for the creation and attraction of know-how, public and private
hospitals, theatres, large commercial spaces, a diversified and quality range of
accommodation and restaurants, the Ria Formosa and the barrier islands, all the
natural and cultural heritage, among others, make Faro an increasingly attractive
municipality for the population and investors.

This reality puts us today before the need to (re)think of municipal housing policy.
We are facing a future in which the city will grow in the number of inhabitants and
attract more and more investors and workers from various sectors of activity,
including cutting-edge sectors, who wish to establish themselves in our
municipality.

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In this context, the Municipality will intervene in terms of housing and
rehabilitation, with an eye on improving the population's quality of life, aware of its
role as a neighbourhood agent.

Housing is a fundamental aspect of social and territorial cohesion, as well as of

the competitiveness of the territories.
In this sense, we identify the need for the municipality to make more housing
available for rental or acquisition to respond to the population's need for mobility
and settlement.

It is crucial to create conditions to satisfy the locals, students and those who seek
to settle in the municipality to work.

Associated with urban construction and revitalisation, the social monitoring work
carried out by the local authority services should continue to reduce segregation
phenomena and increase integration.

Faro must be increasingly attractive but also cohesive and integrative.

The publication, by the Government, of DL 37/2018 (1st Right - Support

Programme for Access to Housing), on 4 June 2018 constituted an instrument that
may be used by the Municipality within the scope of its Local Housing Strategy
and will include a working tool for the Municipality.
This diploma contemplates solutions to support municipalities in creating housing
for people who do not have the financial capacity to bear the costs of access to
housing. Thus, this strategy contemplates a set of housing solutions aligned with
the current needs in the municipality, namely those associated with a lack of
adequate housing or in response to existing degraded or unstable nuclei.

Controlled-cost housing is also included in this strategy to provide housing for

young individuals and families, thus keeping them in the municipality.
The solutions presented will be spread across existing housing areas, ensuring
their social diversity.

The self-promotion of solutions, in line with the Law, will deserve the Municipality's
attention, which will assume its role under the terms of the Law.
This document will follow the dynamics of society and its needs, so it will be a
dynamic document, subject to updates whenever necessary.

The strategy now presented is therefore a strategy to make Faro increasingly

attractive and competitive nationally, but also to make it socially cohesive and
integrating, providing opportunities for all.

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2 - Evolution of the county

a) Territory

The municipality of Faro is located in the sotavento area, in the south of the
Algarve Region (NUTS II Algarve), which is bordered to the south and west by the
Atlantic Ocean. The municipality of Faro is contiguous to the North with the
municipality of S. Brás de Alportel, to the West with that of Loulé, to the East with
that of Olhão and to the South with the Ria Formosa. A section of the Via crosses
it do Infante (A22) and the National Road 125, which are the main structural
interregional roads in the region.

The municipality of Faro, with an area of 202.57 km2, as derived from the new
administrative delimitation between Loulé and Faro fixed by Law 61/2012, of 05
December, represents approximately 4% of the total area of the Algarve region,
and has a resident population which represents 14.1% of the resident population
of the Algarve. The county aggregates 4 parishes: Parish Union of Faro (Sé e S.
Pedro) and Montenegro, which are considered predominantly urban areas; Parish
Union of Conceição and Estoi and Santa Bárbara de Nexe, which are considered
predominantly rural areas.

b) Population

According to the 2011 Census - final results, the municipality of Faro presents a
population density of 318.74 inhabitants/Km2, having, at the date of the census
survey, a resident population of 64,560 inhabitants who presented the following
distribution per parish: 44. 119 inhabitants in the Parish Union of Faro (Sé and S.
Pedro); 8,149 inhabitants in the parish of Montenegro; 4,116 inhabitants in the
parish of Santa Bárbara de Nexe, and 8,176 inhabitants in the Parish Union of
Conceição and Estoi.

The data on the population available for the parishes allows us to verify that it was
in the parish of Montenegro that was verified the greatest demographic dynamism
of the county in the last decade. In this period, the parishes that integrate the
"Urban System of Faro" (Union of parishes of Faro and Montenegro), showed a
population growth of 5,625 inhabitants, going from 46,643 to 52,268
inhabitants—being noteworthy that this value corresponded to 80.96% of the
population of the county, in 2011. The remaining 12,292 residents were distributed
among the rural parishes, with relatively similar population figures.
From the data referring to the two parishes that make up the "Urban System of
Faro" the following aspects stand out:

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 - The continuous demographic growth in the Faro Union of parishes between
1991 and 2011;

- The large growth of the parish of Montenegro, increasing by 2,813

residents between 2001 and 2011.

The consecutive decrease in population registered, in the period under analysis,

by the parish of Santa Bárbara de Nexe should also be mentioned. This shows, in
the last two decades, the weak capacity of this parish to retain the population.

In the period following the last census survey (2011) a relative decline was noted
in most municipal demographic indicators, with most of them regaining stability in
2014 and a clear upward trend in 2016, as can be seen in the following table.

Table 1 - Evolution of Demographic Indicators in the municipality of Faro

Demographic Faro Algarve Portugal

Unit
Indicators
2001 2011 2012 2013 2014 2015 2016 2016 2016

Effective growth rate % - 0,08 -1,42 -1,55 -0,87 -0,32 0,09 -0,1 -0,31

Natural growth rate % - 0,13 0,03 -0,15 -0,75 -0,06 -0,05 -0,24 -0,23

Migration growth rate % - - -1,45 -1,4 -0,02 -0,26 0,14 0,13 -0,08

Crude birth rate ‰ 11 10,7 10 8,6 9,5 9,9 10,9 9,5 8,4

Crude death rate ‰ 9,9 9,2 9,7 10,2 10,3 10,5 11,4 11,8 10,7

Gross nuptiality rate ‰ 5 4,8 5,1 4,5 4,3 3,7 3 3,9 3,1

General fertility rate ‰ 41 43,8 41,7 37,3 41,7 43,8 48,6 41,7 37,1

Gross divorce rate ‰ 2,8 2,7 3,3 2,6 2,6 2,7 2,6 2,1 2,2

Longevity index NO. 43,1 48,8 47,3 47,1 47,2 46,9 46,6 50,2 48,7

Ageing index NO. 106,4 126 123 127,9 132 135,5 136,3 140,1 150,9

Old age dependency ratio NO. 22,7 27,6 28,4 29,9 31 31,9 32,9 33,1 32,5

Relationship of masculinity NO. 93,6 91,8 91,2 91,5 91,3 90,4 90,4 91,8 90

Live births NO. 635 689 626 542 587 607 665 4.175 87.126

Deaths NO. 576 597 607 636 634 643 697 5.214 110.535
Source: INE, I.P., Provisional Estimates of the Resident Population from the Statistical Yearbooks of the Algarve Region 2012 to 2016

In terms of age structure and with regard to the three major age groups of the
population - Children and Young People (up to 14 years of age), Active Population
(15-64 years of age) and Elderly Population (aged 65 years or over), there are
some differences in their distribution throughout the territory.

The parishes with the highest percentage of young population are the urban
parishes, in the southern and coastal parts of the municipality, and the Union of
the Parishes of Conceição and Estoi (with 14.3% of the young population).

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The same happens with the percentage of the active population. With the group
elderly population, the opposite occurs; the parishes with the highest percentage
of the population in this group are the two inland parishes of the municipality,
Santa Bárbara de Nexe and the Union of the parishes of Conceição and Estoi,
which are already inserted in the barrocal strip, and which show a greater
tendency towards ageing.

The parish of Santa Bárbara de Nexe presents the highest percentage of the
elderly population (27.6%), in accordance with the fact that this parish has, in the
last 20 years, lost a resident population, as already mentioned.

c) Socio-economic characterisation of the population

To characterise the standard of living in the municipality of Faro, two types of data
were used. The first is based on the amount of individuals' average monthly
earnings. A second is based on their purchasing power which, in itself, constitutes
a composite indicator and should not be confused with any of the variables
corresponding to a well-defined conceptual scope, such as household income or
consumption.

The purchasing power of the population living in Faro is stronger in the Algarve
region. The concentration of qualified employment in the municipality of Faro will
contribute to this, as a result of the high presence of decentralised Central
Administration services, facilities with regional influence, such as the University
and the airport, and specialised companies attracted by the proximity of the
administrative services and higher-level facilities on which they depend to carry
out their activities.

In 2015, salaried workers in the municipality of Faro earned an average monthly

income of €1,082.97, higher than the monthly average for the region of €926.13,
which corroborates the superiority of the standard of living recorded in the
previous paragraph. Thisabout.7% higher than that observed in 2000.

The municipality of Faro in 2015, with a value of 132.1 (Portugal assumes the
reference value of 100), occupied the sixth position in the national ranking of the
per capita indicator of council purchasing power, only surpassed, in descending
order, by the municipalities of Lisbon, Porto, Oeiras, São João da Madeira and
Sines

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 d) Recent economic dynamics

The Algarve's economy is based on three key sectors: tourism (which includes
accommodation and restaurants), construction and wholesale and retail trade.

In an analysis of the municipality of Faro, comparing the evolution of data from the
year 2011 to the year 2016, we find that in 2011 a total of 8,7521 companies were
located in the municipality, 2,529 companies and 9,458 establishments, which
represented 15% of the number of companies, 14.3% of the number of companies
and 15.3% of the number of establishments existing in the Algarve.

And in 2016, the municipality of Faro had 9,202 companies (+450), 2,623
companies and 9,888 establishments, representing a variation of 5.1 % in
companies, 3.7 % in companies and 4.5% in establishments.

In general, the indicators for the municipality of Faro are superior to the regional
average in terms of company density, turnover, the concentration of the turnover of
the four largest companies and the concentration of the value of the
gross added value of the 4 biggest companies. This confirms the economic dynamism of
the district capital.

The existing companies in the municipality of Faro had the following sectoral
distribution in 2016: the primary sector 793 companies; the secondary sector with
893 companies and the tertiary sector, with 7,516 companies.
This demonstrates the unquestionable tertiarisation of the economic base of the
municipality, undoubtedly related to its administrative vocation and its capitality
around specialised functions supported by equipment and infrastructures of
regional scope.

In 2015, all companies based in the municipality of Faro had fewer than 250
employees and 96.6% had fewer than 10 employees, with an average of 2.4
people/company. In its totality, the county's business fabric had 20,927 people at
its service, distributed by sectors of activity as follows: 1,559 in the primary sector;
3,211 in the secondary sector and 16,151 in the tertiary sector, which represents a
total of 14.29% of workers employed by companies in the Algarve.

Turnover in the Algarve region is 7,078,447 thousand euros, whilst turnover in

Faro is 1,281,014 thousand euros and a GVA2 of 369,610 thousand euros.

1 III.3.5 - Companies by the municipality of head office, according to CAE-Rev.3, 2010 - Statistical Yearbook of the Algarve Region 2011

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The agri-food and aquaculture sectors have been assuming a prominent place in
the region, having relevant importance insofar as they stimulate the reconversion
of the related activities of agriculture, forestry and fisheries. The aquaculture
sector has favourable edaphoclimatic conditions in the region and has been
expanding, particularly in the marine bivalve cultures, which represent about 70%
of national production.3

The agricultural sector is quite dynamic in the municipality of Faro, competitive

and specialized in the intensive production of vegetables and horticultural
products, under forcing and semi-forcing, especially in the south of the
municipality - the Campina area - where there is also a strong urban pressure. In
parallel to this reality, there is subsistence agriculture with crops of cereals, pulses,
potatoes, olive groves, nuts and temporary grassland, which occupied 2,179 ha of
usable agricultural area in 1999, falling to 1,911 ha in 2009.

In 2009, agricultural holdings occupied around 27% of the area of the municipality
of Faro.

Regarding the area of scrubland and forests, the city of Faro had 375 ha in 1999,
falling to 472 ha in 2009, reflecting the reduced significance of forest production.
Despite the strategic geographical position that Faro holds for economic
development, given its connection to the sea and the Barrocal, it should be noted
that forest production is not as relevant as in other municipalities of the interior
Algarve.

Livestock production in the city is reduced, mainly for self-consumption.

The fishing sector has significant representativeness at a regional level, rising

between 2012 and 2014, according to data from DocaPesca4, to 17% of the
country's fishing volume. However, Faro constitutes the second county of the
region with the lowest fishing volume, having, in the same period, presented an
insignificant fishing volume of approximately 0.005t.

In 2011, there were 259 manufacturing companies in the municipality of Faro,

corresponding to 13.10% of the total in the Algarve region. In 2015, there were
218 companies, corresponding to 12.24% of the total in the Algarve region. In that
year, the manufacturing industry employed 648 people, generating a turnover of
28,091 thousand Euros and contributing to the county GVA with 9,192 thousand
Euros.

2 Gross Value Added

3 CCDR-Alg (2006) Algarve Development Strategy 2007-2013
4 DOCAPESCA, Portos e Lotas SA (2012) Annual Report 2012

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The extractive industry stands out, with some tradition in the municipality, namely
in Bordeira, in the parish of Santa Bárbara de Nexe.

The tertiary sector is, as already mentioned, the most important one in the
municipality and, without doubt, the one that gives it the status and visibility it has
as a polarising functional centre at the regional level. The regional administrative
services, the State's decentralised administration, the district hospital, the airport
and the University, all of which are based in the municipality, contribute greatly to
this.

The capital of Faro reveals itself with great intensity in the supply of services, not
only public but also private. An illustration of this importance is that around a
quarter of the turnover generated in these subsectors in the Algarve originates in
Faro.

One example of public service is the University of the Algarve, which has
contributed to the economic dynamics of the municipality and the region, through
its affirmation in terms of training and research, just like the airport that facilitates
connections with the main European destinations.

In the municipality of Faro, the commerce sector is the one that contributes the
most to the regional GVA and simultaneously the one that generates the most
employment. This sector has shown a strong dynamic in the region, both in terms
of the number of companies created and the characteristics of commerce itself,
which has gradually moved away from the traditional commerce model, where
very small structures are predominant. In fact, new forms of commerce have
appeared in the region, particularly large stores and specialised chains organised
in the form of franchising. Only the larger companies introduce innovation into their
processes, while the smaller ones focus on introducing new products.

In terms of the tourism sector, the region has exceptional potential for tourism to
become an international reference in terms of quality.

The municipality of Faro, like the other municipalities whose coastline coincides
exclusively with the Ria Formosa Natural Park, did not experience a growth in
tourism comparable to that of other municipalities on the central coastline of the
Algarve. This is due to the fact that, on the one hand, the tourist product offered by
the Algarve destination has focused almost exclusively on the sun/beach product
and to the fact that in these municipalities, access to the beaches is made more
difficult by the interposition of the Ria Formosa. Only recently has the river
transport service for accessing the beaches improved considerably.

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 In 2011, in Faro's municipality, 22 hotel establishments represented 3.9% of the
region's total supply.
Furthermore, the city of Faro had an accommodation capacity of 2,329 beds,
which allowed it to generate a total overnight stay of 276,842, corresponding to
142,732 guests, or 4.7% of the total verified in the region.

In 2016 there was an increase in supply, with the number of hotel establishments
increasing, corresponding to 4.6% of the total supply in the region. According to
the Survey on the Stay of Guests in Hotels and Other Accommodations, in 2016,
in the municipality of Faro, 29 tourist accommodation establishments were in
activity, with a capacity of 2,395 beds.

The Hotel Industry (HOT) represented 51.72% of the accommodation capacity,

followed by Local Accommodation (AL, 41.38%) and Tourism in Rural and
Residential Tourism (TERTH, 6.9%).

Generally speaking, employment indicators, by their nature, are closely linked to

economic and business indicators. This happens in the case of the Algarve
Region and the municipality of Faro itself. In 2015, following the trend of the
indicators already dealt with in the previous point, 84.7% of the employed
population was concentrated in the tertiary sector, while 12.5% was dedicated to
the secondary sector and only 2.89% to the primary sector.

Graph 1 - Employees working in the municipality's establishments by sector of activity

(2005, 2009, 2011, 2013, 2014 and 2015)

Source: INE - Statistical Yearbooks of the Algarve Region 2006, 2011, 2012 to 2016.

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 In the municipality of Faro and in the comparative period under analysis
(2005-2015), there was an increase in salaried workers in the primary sector
(+0.8%), while in the secondary sector there was a decrease (-3.5%) compared to
the previous percentage. On the contrary, there was an increase of (2.7%) in the
tertiary sector.

At the level of the municipality, it is the urban parishes that present a more
accentuated tertiary dynamic. The union parish of Faro (Sé and São Pedro) and
Montenegro had more than 86% of the active population employed in the tertiary
sector. The secondary sector is more representative in the parishes of Santa
Bárbara de Nexe, the union parish Conceição and Estoi, parishes outside the
urban perimeter, with a weight of 23.14%, and 20.85%, respectively.

In 1991, 2001 and 2011, the municipality of Faro had an unemployment rate of
4.7%, 5.6% and 13.24%, respectively, values lower than the region. In the
intercensal period under analysis, the unemployment rate in the municipality had
an increase of 0.9% (91-01) and 7.6% (01-11), variations lower than the regional
average.

Graph 2 - Evolution of the no. of unemployed people

from 2011 to 2017

Source: IEFP, labour market, municipalities: monthly statistics 2011 to 2017

However, for the period 2011-2017, as we can see by reading the graph on the
evolution of the number of unemployed registered in the employment services of
the region, unemployment in the municipality of Faro shows a downward trend
reaching its lowest value in the summer of 2017.

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 e) Local Accommodation

The trend of an increase in local accommodation (LA) in the municipality has been
occurring annually. Between 2014 and 2015 this increase was more significant,
justified by the entry into force, on 27 November 2014, of the new legislation
applied to this type of accommodation for tourists, Decree-Law no. 128/2014 of 29
August amended by Decree-Law no. 63/2015 of 23 April.

The municipality of Faro had, as of March 31, 2018, a supply of 322 local
accommodations with 1,022 rooms, 1,725 beds and a capacity for 2,348 people.
As we can see from the following graph, the number of accommodations grew
almost 6 times in 4 years.

The values of local accommodation in Faro are still, well below the regional
average.

Graph 3 - Evolution of local accommodation in the municipality between

2013 and March 2018

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 f) Housing stock

Taking as reference the data from the last Census (2011) - Definitive Results and
Calculations, expressed in the following table, it can be observed that in the
municipality of Faro there was, in 2011, a total of
17,257 buildings and 37,975 dwellings, which represents approximately 8.7% of
the total regional construction.

Faro, with around 65.000 inhabitants, holds approximately 14% of the resident
population of the Algarve region.

Faro presents a building density of 85,20 buildings/km2. The parish of the

municipality of Faro that shows the highest density of buildings and with a
significant difference in relation to the others is the Union of the Parishes of S.
Pedro and Sé, with 349,79 buildings/km2.

Table 2 - Size of housing stock - 2011

In 2011, 1,177 building permits were issued in the Algarve, of which 863 were for
family housing. Faro, in the same period, presented 123 building licenses, of
which 90 were for family housing, which represents approximately 10% of the total
licenses issued in regional terms.

Between 2011 and 2017 there was, however, a significant decrease in the number
of licences issued.

In 2017, the Algarve issued 743 licences, of which 620 were for family housing,
while Faro issued 25 licences, of which 21 were for family housing.

It should be noted that in Portugal there was a reversal of the downward trend

13
from 2016, which did not happen in Faro.

In 2016, the housing stock in Faro was estimated at 17,342 buildings and 38,072
dwellings, corresponding to an increase of 0.05% in the number of dwellings
compared to 2015.

According to the latest data published on the characterisation of the housing

stock, which refers to the year 2011 (Census), in Faro, the classic houses
occupied as habitual residence stand out (81.9%), with secondary residence
corresponding to 18.1% of the total number of dwellings in the municipality.

Figure 4 - Occupancy of conventional dwellings in Faro, 2011

In terms of occupancy rates, considering only conventional houses, in the city of

Faro there are, on average, 2.2 people per dwelling, which on average have
between 4.7-4.8 rooms.

In the municipality of Faro, owners occupy around 65% of the dwellings occupied
as usual residences and among these, approximately 46% have charges per

14
purchase (registering the value of average charges per purchase at 406 euros per
month).

Figure 5 - Occupancy of conventional dwellings in Faro by type of owner, 2011

In renting, tenants occupy about 27.4% of the houses, and most of the contracts in
the Municipality of Faro are of indefinite duration (55% of rented and sub-rented
accommodation). Around 38% of the dwellings are leased on fixed-term contracts.
Social or supported rent contracts are associated with about 4% of the dwellings,
and subletting is associated with about 3%.

Figure 1 - Comparative graphical representation of the number of families and dwellings per most
representative urban agglomeration of the municipality of Faro in 3 consecutive census periods
(1991, 2001 and 2011)

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By reading the previous figure, we can see, in most of the parishes, that the supply
of dwellings was much higher than the number of families until 2011, with the
exception of the parish of Santa Bárbara de Nexe, where this superiority was only
felt in the last census (2011).

The city of Faro, which includes the parishes of S. Sé, is where this disparity is felt
most. In fact, there was an excess of housing supply compared to the number of
families in the municipality, with a reduction in this difference in the 2001 census.

However, in recent years, with the allocation of several buildings to a diverse set of
economic activities, and increased demand, the number of dwellings available for
rent has decreased.

g) Real estate market

With regard to the real estate market, both the number of buildings transacted and
the associated turnover decreased from 2011 to 2013 (during the economic
recession), reversing this trend in 2014, the year from which the sector of real
estate acquired new momentum. However, it was not until 2015 that the values
associated with real estate surpassed those of 2011, as can be seen in the
following table.

Table 4 - number and volume of property transactions (2011-2016)

Concerning property sales values, INE now publishes information on the median
value of sales per m2 of family housing, reporting the first data to the 1st quarter of
2016.

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Since that period and until the 1st quarter of 2018 (last published data), it is
possible to verify the continued increase in the median value of sales per m2 in
Faro. Between Q1 2016 and Q1 2018, the increase was 24.8%, or € 238/m2.
Table 5 - Median value of sales per m2 of dwellings

h) Urban Rehabilitation Areas (ARU)

In all 4 of Faro's ARU's, which constitute its historic area, there are currently 122
vacant buildings, which the local authority has directly monitored regard to their
stability and physical condition, and regular contact has been made with the
owners.
Table 6 - Number of vacant buildings in the ARU

Source: CMF/GARU (2018)

i) University of Algarve
The University of the Algarve, with its two campuses located in the municipality,
contributes to the strong dynamics of the Faro real estate market, mainly in terms
of rentals.
The table below shows the total number of students enrolled in higher education in
the Algarve region, and its analysis allows us to see the outstanding weight of the
University of the Algarve in the reception of both national and international
students.

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In fact, since 2016, the University of Algarve has welcomed around 90% of the
students attending higher education in the region. There has also been a gradual
increase in the number of international students due to persistent work in various
parts of the world to attract students to Faro. It is clear (from the University's
monitoring of their presence and interests in the region) that many numbers are
interesting and have settled in the region, particularly in Faro.

Table 7- Number of students enrolled in higher education in the Algarve

In this context, a concern emerges, common to most cities with higher education
offers: the provision of accommodation for students coming from other parts of the
country.
Solving this constraint involves identifying partners available to take on the
construction of new student residences.

j) Overall assessment

Faro, as the capital of the Algarve, is characterised by a higher than the average
weight of services in the total economy.

Nevertheless, it has followed the country's economic and social dynamics

evolution trends. The municipality shows economic growth when the national
economy evolves positively, registering slowdowns when the country goes into
recession, as happened in 2009-2012 as a result of the international crisis then
installed.
But until a few years ago, the municipality received the economic impacts in a
"softened" way due to its high dependence on services (some from the central and
local public administration).

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In recessions, unemployment never grew as much as in the rest of the country, but
in times of economic growth, the demand for the municipality to invest and create
jobs lagged.
Today, the reality is different. Increasingly, the city is being sought out for
investment. Hotels and restaurants, real estate, information and communication
technologies or agriculture are just some of the sectors where the demand for
investors is felt the most.

With regards to its population, Faro registers a stabilization of the population, as in

the rest of the country, witnessing a greater demand for the coastal parishes, to
the detriment of the inland ones. Thus, we have a younger population settling in
the parishes of Sé/S.Pedro and Montenegro, while Santa Barbara de Nexe and
Conceição/Estoi, are witnessing an ageing population.

Regarding the evolution of demographic indicators, it should be noted that Faro

has a higher proportion of young people and a lower proportion of older adults
than the average for the region and the country.

The real estate market and the construction sector has stagnated in recent years
due to the aforementioned international crisis and population stagnation, which
has meant that there is no demand for new housing.

With the resumption of the economy and the interest in the real estate sector, the
Municipality sought, through the definition of Urban Rehabilitation Areas (URA's),
to encourage the recovery of degraded buildings, with positive results. This
recovery, which we have witnessed in recent years, has made it possible to
receive investment, rehabilitate vacant and degraded buildings, thus contributing
to improving the municipality's image, and place more dwellings on the housing
market and for other purposes, namely local accommodation.

As positive factors with an impact on the dynamics of the municipality, we should

also point out that Faro is the 6th national municipality with the highest purchasing
power, and the 1st in the Algarve, as well as the recent dynamics of the University
of the Algarve in attracting new students, namely those from abroad.

This dynamic, both structural and cyclical, impacted the local property market, just
as it did on several other parts of the country.
The appearance of new investments with the creation of jobs, a greater demand
from young people who settle in the municipality to study for higher education, and
the stimulation of the real estate market, have led to a greater demand for
housing, which, associated with the lack of new supply, has had an impact on sale
prices and rents, leading to a shortage of residential dwellings.

19
3 - Social housing in the municipality of Faro

As mentioned above, construction activity has declined very sharply over the last
few years, virtually stagnating, resulting in no new properties being placed on the
market.

In a more marked way, this happened in social housing. The last dwellings made
available were at the end of the 1990s, with the Urbanisation of Stº António do
Alto, and in 2006, with controlled cost housing, in Av. Calouste Gulbenkian.

In recent years, due to the financial rebalancing plan that the Municipality had to
adhere to to balance its finances again, there were no conditions to invest in social
housing.

Currently, with the Municipality's finances balanced and aware of the existing
needs, the investment will be made in this area, seeking to improve the
population's living conditions.

a) History

The most recent construction in the municipal housing park dates back to the late
1990s. This is the Urbanização Municipal de Santo António do Alto, with 149
homes. Since then, Faro City Council only launched, in 2006, the Contest for the
Alienation of 144 Houses at Controlled Costs in Avenida Calouste Gulbenkian.
This competition aimed to provide living conditions for residents who did not have
their own homes and did not have the economic resources to acquire houses at
market prices.

Currently, the rents in the market are, in some cases, excessive, given the families'
financial resources, so many choose to request support from the municipality for
the attribution of social housing. However, it has not been possible to satisfy the
housing needs of families since the Municipality does not have any unoccupied
social housing units.

Due to the lack of dwellings in quantity to accompany number of requests

received, Municipality has opted to assume a more active intervention in the social
area, seeking to mitigate the needs, namely of an economic nature, manifested by
families, through its Department of Social Development and Education (DDSE).

The DDSE's mission is to support the definition of municipal policy in the areas of
social action, housing, health and education, exercising the corresponding
normative functions and making operational the planning, execution and
evaluation of the actions carried out in these areas.
Examples of DDSE's intervention, besides the Management of the Municipal

20
Housing Park, previously characterised, are the following services/responses:

Temporary Support Accommodation - to meet temporary accommodation needs,

there is one male accommodation with a capacity for 3 men and one female
accommodation with a capacity to accommodate 3 women;

Social Services Network - exists to respond to situations of social vulnerability,

with a diversity of interventions such as information, guidance, referral, trust, social
support, social inclusion. Provides daily social care to individuals and families at
the municipality headquarters, as well as in the respective parishes, and
cooperates in the planning of resources and social/health equipment to develop
the most appropriate responses to the needs of the most vulnerable and at-risk
groups;

Support Office for the Elderly (G.A.I) - this is a local public service operating in the
DDSE, which aims to attend to elderly, isolated and needy residents of the
Municipality of Faro, to contribute to the personal and social enhancement of the
elderly, promote the active participation of the elderly in social life and contribute to
improving their quality of life.

Its main activities are to help resolve bureaucratic issues related to filling in
applications/forms, to identify the main needs to mediate and direct the citizen
towards possible social responses and provide information in terms of legislation.
At the same time, a Working Group on Ageing (GTAE) was created, which
includes 12 entities from the municipality with responses in the area of ageing.

Within the scope of the GAI, a teleassistance pilot project has recently come into
force, aimed at older adults living in isolation, intending to reduce isolation factors
and signal in the event of an emergency;

Inclusion Desk - provides a specialised service in the disability/incapacity area,

namely informing on social responses, employment and support for employers,
social benefits, support products/technical help, resource centres for inclusion,
vocational training, early intervention, tax benefits, accessibility, transport and
education. It is aimed at people with disabilities and their families, employers and
the general public seeking information on disability issues;

Local Centre for Migrant Integration Support (CLAIM) - its mission is to support
foreign residents in the municipality. CLAIM is the result of a Cooperation Protocol
between Faro City Hall and the High Commission for Migrations (ACM);

Emigrant Support Office - aims to inform these citizens of their rights in the host
countries, support their return and reintegration in Portugal, contributing to the

21
resolution of the problems presented, in a rapid, free and personalised manner, as
well as facilitating contact with other Portuguese public administration services;

Others - besides the community support mentioned above, the Social

Development and Education Department also provides social transport, the social
vegetable garden, the Local Volunteer Bank and, through the Regulation of
Support to Associations and the financial contribution of the Municipality to Social
Non-Profit Organisations.

The Local Council for Social Action (CLAS), the structure that is the basis for the
functioning of the Social Network programme, as a "forum for articulation and
pooling of efforts", currently brings together 88 public and private, profit and
non-profit entities, based or operating in the municipality of Faro, with a diverse
range of social intervention areas.

Based on the main problems identified by the Social Network, thematic working
groups were created: a Working Group on Ageing, Working Group on Disability,
Working Group on Equality, the Centre for Planning and Intervention for the
Homeless, and the Working Group on the Integrated Clothing and Food
Response.

b) Existing social housing

The municipality currently has social housing located mainly in 3 neighbourhoods:

Carreira de Tiro, Cidade de Hayward and Santo António do Alto.
It also has a number of houses scattered around the city, such as Bairro dos
Centenário.
In total, it has 447 social housing units, of which 399 can be rented, with the
remainder being let on a precarious basis.

Centenaries neighbourhood

This neighbourhood consisting of 16 houses were built in 1940 by the Algarve

Provincial Government and the Faro City Council to provide housing "for the city's
poor families".

Through the Deliberation of "Reconversion of the Centenário Neighbourhood",

approved in an Ordinary Council Meeting on 10.10.1995, this neighbourhood was
destined to the installation of the Artisan's Village, aiming the development of
activities of social scope by an IPSS (Provectus), no longer assuming its original
function.
Currently, 4 families still live in Bairro dos Centenário, which coexist with the
activities of the Provectus Association developed in the other 12 houses.

22
Provectus is a Private Institution of Social Solidarity, with headquarters in Faro,
non-profitable, that develops its activity in older adults, aiming to improve the
quality of life of the elderly, taking into account their needs and specificities.

Horta da Areia Social Emergency Neighbourhood

Located next to the Commercial Pier in Faro, the Bairro Horta da Areia appeared
at the end of the 1970s to rehouse people/families from the former Portuguese
colonies.
Currently, this neighbourhood is mainly made up of Portuguese of Roma and
non-Roma ethnicity, where different habits and lifestyles come together in the
same space.
The Bairro da Horta da Areia is a residential area of social housing consisting of
21 pre-fabricated and 23 masonry buildings in a high state of degradation.
More than 40 years later, the neighbourhood is still there, serving as housing for
about 200 residents divided into 50 households.

Neighbourhood Shooting Range

This neighbourhood, built in the 80s, began to be inhabited in 1985. Originally,

there were 180 social housing units, but over the years Faro Municipality has sold
the units to tenants.
The selection process of the households was done on the basis of a call for
tenders for the renting of council dwellings.
The selected families were living in precarious accommodations (shacks or
squatted buildings) as well as in houses in poor habitable conditions.
Currently, the Municipality owns 122 dwellings in this neighbourhood, as 58 have
already been sold, at the request of the respective tenants.

Bairro Presidente João Negrão Belo

Located next to the City of Hayward, in an area with easy access to public
services, namely the hospital, this neighbourhood was built in the years 1993/1994
and began to be inhabited in the years 1994/1995. It comprises 9 blocks of 2
storeys with a total of 96 dwellings, of which 48 are two bedrooms, and 48 are
three bedrooms.
The Presidente João Negrão Belo neighbourhood is inhabited by people of
different ethnic backgrounds who live together peacefully.

Sto. António do Alto neighbourhood

This is the most recent neighbourhood in the municipal housing park and its

23
construction dates back to the late 1990s. It was built to provide housing
conditions to the population living in the former Bairro da Atalaia.
The housing complex in question is composed of 149 dwellings distributed by 10
blocks with 5 floors each. There are 20 one-bedroom, 55 two-bedroom, 55
three-bedroom and 19 four-bedroom residences.

Other

Besides the social housing units identified in the neighbourhoods below, Faro
Municipality also owns 35 social housing units scattered around the municipality.

i - Income

Over the years and by the legislation in force at each time, the Municipality of Faro
has made available the various types of rent applicable to social housing:

Social Income - Order 288/83 of 17 March (Social Income/Personal Income

Allowance);

Supported tenancy - Law no. 81/2014 of 19 December, as amended by Law no.

32/2016 of 24 August;

Conditional Income - Law no. 80/2014 of 19 December.

Currently, under the terms of Law no. 81/2014, amended by Law 32/2016, of 24
August, the Municipality applies the supported lease regime. This is a regime
applicable to dwellings owned, for any reason, by local authorities, among others,
which are rented by them or sublet with rents calculated on the basis of the
income of the households for which they are intended.

Therefore, with the objective of standardising the types of rent, as well as making
the social housing allocation process as transparent and fair as possible, more
than 6 years after the previous Regulation on Access and Management of the
Faro Municipal Housing Complex came into force, taking into account the
experience acquired with its application and considering the legislative alterations
introduced in the meantime, the Municipality decided to approve a new Municipal
Regulation on this matter.

Thus, on 5 February 2018, Regulation No. 91/2018 - Regulation for the

Management of the Housing Park of the Municipality of Faro was published in the
DR.

With the entry into force of the new Regulation it became necessary to proceed

24
with the updating of the rents, which will occur in a phased manner, over a period
of 4 years. This process implied the submission of documentation by the tenants,
which allowed the updating of the information relative to each family unit, as well
as the determination of the rent to be paid, under the terms of the legislation in
force.

ii - Maintenance programme for social housing in Faro

Considering that the vast majority of the buildings that make up the housing stock
of the Municipality of Faro, destined for social housing, were built, as previously
mentioned, in the 1980s and 1990s, it can be seen that some of them are
presenting levels of degradation that justify an evaluation and definition of a
maintenance plan for social housing in Faro, with a view to their recuperation, as a
complement to all the investment in maintenance and recuperation that has
already been made.

As an example, it should be noted that in recent years maintenance/rehabilitation

works were awarded to a value in excess of 320,000 euros. These works include
the restoration of lifts, façades and roofs, and the repair of electrical installations,
among other interventions.

Work is currently planned to be carried out on a number of facades which have not
yet been intervened on, at an estimated cost of 285,000 euros.

This work will be continued, when necessary, with intervention on the inside and
outside of the buildings.

Under the terms of paragraph f) of article 29 of the Regulation for the Management
of the Housing Estate of the Municipality of Faro, aspects such as the detection of
situations of degradation and insecurity of the buildings and fractions, namely in
relation to the gas, water and electricity networks, lifts and electromechanical
equipment, will be taken into account.

At the tenants' request or whenever the safety, salubrity and comfort of the
dwellings are in question, inspection visits will be carried out.

Based on the results obtained, and according to paragraph c) of Article 29 of the

same Regulation, the Municipality will ensure the conservation, rehabilitation and
improvement works of the buildings and units, regarding the parts for private and
common use, whenever necessary and under its responsibility.

25
This intervention should not, however, be confused with the tenants' obligations,
namely those set forth in article 31 of the Regulation for the Management of the
Housing Park of the Municipality of Faro, such as:

● "Maintain the dwelling, the common areas and all other structures and
public facilities associated with the dwelling, in a good state of conservation
and cleaning, making careful use of them";

● "Conserving the electric light, water, gas, sewerage and all plumbing
installations."

● "To assume the costs of small works necessary for the maintenance of the
fire, namely, replacement of taps, sanitary ware, flooring, shutters, flushing
cisterns and painting.”

In order to implement the maintenance plan for social housing in Faro, a

multidisciplinary team will work within the scope of construction, which will ensure,
on an ongoing basis, the works that may be identified as necessary.

iii - Disposal of real estate

Article 58 of the Faro Municipal Housing Park Management Regulation foresees

the possibility of alienating municipal housing units to their respective tenants, at
their request, as well as the onus of their inalienability, under terms to be defined
in a specific municipal regulation on the matter.

On 14/08/2017, the Project for the Regulation of Alienation of Social Housing of

the Municipality of Faro was approved in a Town Hall meeting.

On 06/07/2018 the same regulation was approved by the Municipal Assembly.

On 8 August 2018, Regulation 522/2018 - Regulation for the Alienation of Social

Housing of the Municipality of Faro was published in Diário da Republica and
came into force the following day.

In parallel with this process, there are two other initiatives underway that focus on
Faro City Council's housing stock:

- Constitution of condominiums in buildings that are already registered as

horizontal property. This situation occurs in the buildings that are part of the

26
 Shooting Range. In this regard, it should be noted that in all social housing
buildings of the Shooting Range there is a significant quantity of dwellings
sold to private individuals, in some cases close to 50% of the total number
of properties.

Therefore, and in order to allow private unit-holders, who own dwellings in the
respective buildings, to participate in the decisions and management of the daily
life of their condominiums, condominiums will be set up in the short term;

- Constitution of horizontal property, in buildings where this is not yet the

case. This measure will allow tenants that meet the conditions and wish to
do so, under the terms of the Social Housing Alienation Regulation of the
Municipality of Faro, to proceed with the acquisition of the property where
they currently reside, in a letting regime, on an equal footing with the other
tenants that have already exercised that option, namely in buildings in the
"Carreira de Tiro".

c) Identified housing needs

The serious economic crisis that has hit the country, leading to a high
unemployment rate and an increase in precarious work, combined with the
seasonal nature of the Algarve region, has led to an increase in requests for social
housing by families and isolated residents.

On the other hand, the recent economic recovery has put pressure on the real
estate market, namely in the areas of renting and acquisition, reducing the supply
of available housing, with the consequent increase in prices, which has made it
difficult for families to rent or acquire.

In this regard, it should be recalled that INE recently published statistical

information on the median value of rents per m2 of new family housing leases, for
the year 2017. Faro had a value of 4,96 €/sqm, which is above the national and
mainland average (4,39 €/sqm), but slightly below the regional average (5 €/sqm).
With that value, Faro is the 6th municipality with the highest value in the Algarve.
Thus, given the requests registered and the contacts received over time, it is
possible to ascertain the existence of different profiles of requests/needs, which
will naturally determine the choices of housing profile that the Municipality will
make available in the coming years.
Thus, given the history of contacts, on the part of citizens, for the purpose of
housing allocation by the municipality, it is possible to identify three different
profiles:

● Residents and families in financial need without the possibility of acquiring

27
 housing in the private market or of renting at market prices;

● Residents and families living in precarious housing conditions;

● Residents and families, mostly young people, who are looking for housing
in the municipality of Faro, in order to develop their professional activity in
the municipality, but who do not have the resources to acquire housing in
the private market.

In what concerns municipalities with financial needs, financial need is understood

as the situation of the person or housing aggregate that detains a movable
patrimony with a value inferior to 5% of the limit established under the terms of
paragraphs 4 and 5 of article 2 of Decree-Law no. 70/2010, of 16th June, in its
current wording, and whose average monthly income is inferior to four times the
social support index (IAS).
This framework makes it impossible for families to buy or rent housing in the
private market.

As of 23 October 2018, the Municipality had a total of 339 active housing

applications. For the purposes of calculating the number of active processes, all
residents who have made contact with the (current) Department of Social
Development and Education, expressing interest and need to have access to
housing, since 2016, were considered.

An analysis of the dynamics of the requests registered shows some homogeneity

in the number of requests registered in the services. There were 111 requests in
2016, 92 in 2017 and 136 by 23 October 2018.

As for the type of housing requested, which depends on the size of the family unit,
the majority of the requests received are for smaller dwellings (T1 - 109 requests
or T2 - 119 requests).

As for the typologies T3, T4 and T5, the number of requests registered is 69, 25
and 17, respectively.

Table 8- Number of Housing Applications registered with the DDSE

28
 Fonte: DDSE/ CMF

As for the citizens living in precarious situations in the municipality, it is possible to

identify a diverse set of situations scattered throughout the municipality.

In June/17, the municipality participated in the National Survey of the National

Rehousing Needs of the IHRU - Housing and Urban Rehabilitation Institute, and it
was possible to verify, to date, the existence of 816 families to be rehoused, of
which 202 still reside in shacks or similar, as per the distribution presented below.

Table 9 - Nuclei to be rehoused

Fonte: DDSE/ CMF

The 3rd group of residents living in precarious housing is located in Praia de Faro.
Whether due to the generally precarious and temporary nature of the dwellings or
to a set of factors of the natural order, the dwellings in question are subject to high
risk and therefore require a rehousing strategy.

From an environmental point of view, this is an unstable system that imposes

strong constraints on its occupation, which are not always respected, since it is
located in a vulnerable and high-risk area. The occurrence of storms and the rise
in the average sea level are the main factors that lead to the high susceptibility of
the system.

29
With this reality in mind, a joint survey was carried out by Polis Ria Formosa and
Faro City Council to assess that community's characteristics and seek solutions
for their rehousing. In the contacts, there was a concern about identifying the
households that best fit each of the possible rehousing alternatives as far as their
location is concerned.

The characterisation was based on the professional activities of working adults

and the places where they carry out these activities, considering, in particular, the
existence or not of activities linked to fishing and shellfish gathering.

In the survey carried out 49 households were identified as having the appropriate
profile for rehousing in Montenegro, as they are connected to the parish
headquarters, namely for professional and school enrolment reasons.

Concerning the characterisation of those 49 aggregates, it is possible to infer that

the great majority presents a dimension adequate for their installation in typology
T1 and T2 - 22 and 15, respectively. As for the number of households whose
dimension implies the attribution of typology T3, 12 were identified.

Table 10 - Relocation of Montenegro by type

With regard to the age of the population, it is quite differentiated, ranging from 2-3
years to 89.

However, from the perspective of distribution by age groups, it is relatively

homogeneous.

30
 Table 11 - Age groups of the residents to be re-housed in Montenegro

With regard to the type of occupation, at the time of the survey, there was a
significant number of residents who were not connected to the labour market
(students, domestic workers, unemployed and retired people).

Concerning the employed population, it can be seen that most of them do not have
any activity related to the sea.
Table 12- Type of occupation of the residents to be rehoused in Montenegro

Finally, we have residents and families, primarily young people, who are looking
for housing to buy in the Municipality of Faro in order to develop their professional
activity there, but who do not have the resources to buy housing in the private
market, given the values currently practised (in the table below we can see the
substantial increase in the median value of sales per m2 in the Municipality of

31
Faro, in the last two years).

Table 13 - Median value of sales per m2 of dwellings

Given the values practised in the private market (238€/m2 increase in the median
value for sales between the first quarters of 2016 and 2018), there have been
dozens of approaches to the (current) Department of Social Development and
Education, asking about the possibility of acquiring affordable housing, highlighting
the need for this type of public response.

Therefore, based on this diagnosis of the municipality's housing needs, we will

seek to promote diversified responses that enable the resolution of the housing
problem of a wide range of families.

The proposal presented below foresees a set of concrete actions destined to move
forward, in the short term, with the placement of about 200 dwellings in the local
housing market, of various types, aimed at families with different profiles and
capacities to take on housing costs.

Thus, the properties to be placed on the market will be destined, either to be

alienated at controlled costs or to be placed on the social rental market, with rent
values that will take into account the income of the tenants and their families.

In situations where social weaknesses are identified among rehoused families,

action plans will be defined, with a view to mitigating the factors leading to social
exclusion, through the dynamisation of monitoring programmes, seeking to
promote full integration.

4 - Lines of action
Aware of the current needs in the municipality, the local authority will give priority
in its action plan to 4 main lines of action:

a) Rehabilitation;

32
 b) Rehousing of households in severe housing need;
c) Controlled Cost Rental Housing;
d) Affordable Housing for Sale;
e) Monitoring of self-promotion processes of housing solutions, under the
terms of DL 37/2018.

The intervention axes are aligned with the government's housing policies, namely
in DL 37/2018 that establishes the "1ºDireito - Programa de Apoio ao Acesso à
Habitação".

Aspects such as accessibility, namely technical standards for accesses, will be

taken into account during the preparation of projects, with a view to access and
use by people with reduced mobility and autonomy.

Aspects related to sustainability and energy efficiency will also be considered in

the respective projects whenever possible.

It should be noted that, under the terms of the Faro Municipality Housing Park
Management Regulation (Regulation 91/2018), published in Diário da Republica
on 5 February 2018, the conditions for access to municipal housing are defined,
namely:

● Aged 18 or over, or emancipated under the terms of the applicable

legislation;
● Portuguese nationality, or if they are foreign nationals holding valid
residence permits in Portugal who meet the conditions established in Law
No. 81/2014, of 19 December, in its current wording, and are not in any of
the situations of impediment provided for in the following article;
● Residence, on a permanent basis, for five or more years in the Municipality
of Faro;
● Census in the municipality of Faro;
● Regularized social security contributions;
● Situation regularized in relation to taxes due;
● Among others, defined in article 7 of the Regulation;

a) Rehabilitation

As far as rehabilitation is concerned, as there are no municipal buildings available

for this purpose, the housing answers are essentially private, duly framed in two
vectors, namely:

33
 1) Based on the Urban Rehabilitation Operations (ORU) and on the incentive
measures (exemptions, fee reductions and tax benefits) contextualised in
the Urban Rehabilitation Areas in force.

In the specific case of Faro, the benefits granted to urban requalification

operations have been an effective incentive to active intervention by private
individuals, leading to the recovery of many vacant and degraded buildings placed
on the market. These incentives may take the form of temporary exemption from
IMI (Municipal Property Tax), IMT (Municipal Transactions Tax) exemption, IRS
(Personal Income Tax) or IRC (Corporate Income Tax) reduction under the terms
of the legislation in force.

Table 14 - Urban Rehabilitation Areas in force

34
5 Selected objectives relating to housing, in the context of those established in the Urban Rehabilitation Operations.

6 Selected strategic lines regarding housing, in the context of those established in the Urban Rehabilitation Operations.

2) Based on the Urban Rehabilitation Action Plan, which presents as

Investment Priorities, the rehabilitation of private buildings for housing,
commerce, tourism and other services identifying them.

Also, the IFRRU 2020, a financial instrument aimed at revitalising cities,

supporting the physical revitalisation of space dedicated to disadvantaged
communities and supporting energy efficiency in housing, could be mobilised.

Although, as previously mentioned, the Municipality does not have any buildings to
rehabilitate, it will evaluate the possibility of proceeding with the acquisition of
degraded buildings for later rehabilitation whenever buildings with the necessary
characteristics are identified and it is demonstrated that, from the
economic-financial point of view, this option is the most adequate, when compared
with other alternatives that may exist for placing new dwellings on the market.

Also, in terms of rehabilitation, the Municipality will continue the process of

maintenance/rehabilitation of its housing stock, which began some years ago.
Likewise, it proposes to set up condominiums in the various social housing
buildings in order to speed up and simplify the regular maintenance of the
equipment and infrastructures existing in them (lifts, electricity, ....).

35
 b) Rehousing of households in severe housing need

Under the terms of DL 37/2018 several situations fall under the concept of lack of
adequate housing, precarious housing, insalubrity and insecurity, overcrowding, or
inadequacy of space, for various reasons.

In these terms, a set of situations are identified in the municipality, namely the
Horta da Areia, or the dwellings in Praia de Faro, among others, for which the
rehousing of a set of identified individuals and families is proposed.

These are situations of unstable nuclei, as well as degraded nuclei, which will be
reallocated through the construction of buildings or housing developments
(according to art. 27 of DL 37/2018).

As a response, the Municipality of Faro proposes a set of solutions that include the
construction of housing development(s) under a controlled cost housing regime
(according to art. 28 of DL 37/2018), on land already acquired, or to be acquired,
for this purpose.

Whenever deemed appropriate and necessary, given the profile of the families,
namely their housing, financial and social condition, technical and social support
will be made available, during the transition process, by various institutions
intervening in the municipality, to empower the respective individuals and families.

It should be noted that, at this moment, there are two plots of land are already
acquired, for the purpose described above. These are lands located in
Montenegro and Braciais.

Montenegro - 6 buildings
Faro City Council has acquired seven lots, for which the basic architectural plans
have been drawn up for six of these lots, with the following occupation parameters:
- 3 Floors above ground destined for habitation;
- Gross Living Area of 4034 m2;
- 49 Fires;
- Total estimated investment of EUR 4,123,000.

36
 Figure 2 - Plot summary plan - Permit nº1/2007

Allotment of Braciais

Plot of land situated in the Braciais/ Patacão area, which was the object of a
punctual alteration of the Faro Municipal Master Plan, with a view to the
implementation of a re-housing programme.

It is aimed at rehousing families living in precarious conditions and also provides

an area of equipment for the implementation of a Community Centre with different
facilities:

- 2 Floors above ground;

- Number of dwellings for rehousing, to be defined.
- Investment to be made: to be defined

37
 c) Cost-controlled housing for rent

intending to provide the rental market with more dwellings to be placed on the
market at controlled costs to allow access to housing for families with fewer
resources.

The intention is to go ahead with the construction of a building on land owned by

the Municipality.

Rua Ludovico Menezes - 1 building

The plot is intended for a building mainly for rented controlled cost housing, with
the following occupation parameters:

- 4 Floors above ground destined for habitation;

- 2036 sq.m. of Gross Living Area;
- A total of 17 dwellings are planned.
- Total estimated investment - EUR 1,855,800.

Figure 3 - Plot summary plan

38
 d) Affordable housing for sale

Bearing in mind the demand for housing to be purchased by families who are
already living in the municipality or wish to develop their professional life there and
establish themselves as a family, but do not have the necessary resources to
access housing at market prices, the aim is to provide housing for sale at
affordable prices.

There is already land identified for the implementation of the projects.

Sr.ª da Saúde Road - 3 buildings

3 Lots destined for low-cost residential buildings, with the following occupation
parameters

- 6 Floors above ground;

- Gross Residential Area of 7,325 m2;
- A maximum of 89 fires are expected.
- Total estimated investment - EUR 6,035,000.

Figure 4 - Extract from the Lejana Detailed Plan

39
 e) Self-promotion processes of housing solutions

The Municipality will seek to encourage self-promotion solutions, accompanying all

the processes that private parties will promote, namely under the terms of DL
37/2018.

Article 25 of the above-mentioned law states that "People who fulfil the access
requirements to the 1st right may benefit from direct support to access adequate
housing. Right, individually or as members of a household". Eligible people can be
direct beneficiaries of financing for rehabilitation works in apartments or
single-family buildings owned by them.

According to article 59 of the above DL, individuals must submit their applications
to the competent municipality, which can allocate municipal housing, include the
application within the scope of its own candidacy for 1st right or consider the
application as an individualised candidacy by forwarding it to the IHRU (Institute of
Housing and Urban Rehabilitation). In this case, the solutions proposed should be
adequate for concrete situations.

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5 - Financing
Financing is central to the process of social housing construction. Considering the
limited resources currently available to local authorities from the central
government, the construction of social housing by municipalities cannot be fully
supported by municipal budgets.

Moreover, other questions could be raised concerning this matter. First of all, given
its social and, in many cases, even emergency nature, the debt contracted for the
construction of social housing should not be considered for assessing the level of
indebtedness of municipalities. We leave, however, this discussion to other
forums.

As far as the current local housing strategy is concerned, it is foreseen that it will
be financed with recourse to lines of support made available by the Government
and, suppletively, to bank loans.

When there are support measures/ programmes in place, the Municipality will
formalise the application whenever possible. An example is DL 37/2018, 4 June
2018, which establishes the "1ºDireito - Programa de Apoio ao Acesso à
Habitação". According to the referred diploma, "this is a program of public support
to promote housing solutions for people living in undignified housing conditions
and who do not have the financial capacity to bear the cost of access to adequate
housing", having as beneficiaries, namely the Municipalities.

The same diploma defines, in articles 14 and following, forms of financing the
construction of social scope, foreseeing financial support that may pass through
non-refundable financial co-participation and subsidisation of the loan interest rate.

Article 45 et seq. Define the value of construction financing.

According to Article 47 (Maximum value of the Contribution for the Construction),

the maximum value of the contribution is 35% of the final value of the construction,
plus other expenses as required under Article 14 (e.g. services related to projects,
supervision and safety).

Article 36 also states that in particular situations, such as construction aimed at

rehousing hazardous or run-down areas, the co-funding is increased by 10%.

The municipality may also resort to a loan with subsidised interest rates by IHRU,
with a maximum term of 30 years.

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6 - Execution timetable
● 2018

Entry into force of the Housing Stock Management Regulations (Regulation

91/2018, published on 5 February;

Entry into force of the Regulation on the Alienation of Social Housing

(Regulation 522/2018, published on 8 August);

Constitution of condominiums;

● 2019

Braciais Project;

● 2020/2021

Start of construction work in Montenegro;

Construction of rent-controlled housing;

Construction of affordable housing for sale.

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7 - Final note
The borough of Faro has seen its reputation and development increase
significantly in recent years.

Competitiveness in terms of tourism, economic and social development,

associated with the recovery of its heritage, public space and buildings, and a
greater scientific, cultural and business reputation are today marks that distinguish
the municipality, with clear benefits for its population.

These are realities that no community concerned with its development and
well-being would disdain. However, they are, paradoxically, the cause of some of
the difficulties the municipality has experienced in providing housing on the scale
of demand.

Considering this circumstance, several other factors have contributed to the

limitations described. Among them is the small amount of construction licensed
between 2007 and 2015.

The document presented here corresponds to the first response from the
Municipality. It obeys a fundamental premise: to articulate with the Central State
and local agents the measures that make it possible to recover lost time and
space.

A proposal involving an investment in housing worth more than 15 million euros is

presented as a starting point.

It gives a diagnosis, raises the constraints, points out the opportunities and, above
all, exposes solutions. Solutions that, as we know, cannot be definitive in a world
in constant change and a market that, like the housing market, is constantly
evolving. This is, therefore, a document that does not close the process. It leaves
room for adaptation and is dynamic in its development.

It is, in short, the local authority's strategy to provide the municipality with more
and better housing conditions for all those who live here and those who visit us.

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