Prefabricated and modular homes: all about licensing and other legal procedures

Prefabricated and modular houses have been gaining more and more popularity in Portugal, due to the greater simplicity and speed of construction compared to traditional masonry. And the new needs for space at home and ways of life, generated by the Covid-19 pandemic, have contributed to the growth of "fashion" in the national market, in line with international trends. But how do you deal with permits and other aspects, such as taxes, in this type of construction? We now respond with legal basis.

These houses are pre-built buildings in sections or houses assembled in multiple modules. They are produced in a factory and transported to the land, where they will be assembled in a single house and the final finishes will be carried out, being an alternative to the construction of a traditional house (traditional masonry) in which the building is built from scratch on the land that will be busy.

And if there are gains in terms of time and cost of prefabricated construction, in addition to other advantages - along with some disadvantages, such as logistics -, it will also be necessary to consider the costs and ´timings´ of the legal procedures associated with this type of works in order to decide whether this is the best option, as warned by Belzuz Abogados* in this article prepared for idealista/news, focused on the legal requirements that the choice of this type of construction entails.

1 – Land selection
Before starting to manufacture the modules that will make up the house, the first step will be to find the land on which the construction will be built.

It is advisable for the manufacturer to visit the chosen land in order to check its location, soil conditions, orientation towards the sun and wind, accesses, the installation of public services or requirements for a well or sanitary installation. All these factors will condition the final construction plan and the manufacturer will also be able to budget for the costs of land preparation if these are not included in the price.

From a legal point of view, the Legal Regime for Urbanization and Building (DL n.º 555/99, of December 16) defines “Edification” as “(…) the activity or result of the construction, reconstruction, expansion, alteration or conservation of a property intended for human use, as well as any other construction that is permanently incorporated into the ground.”, making no distinction between traditional masonry buildings and modular and prefabricated houses, whereby the legal criteria to apply in the selection of a land for construction will be similar to those applied in a traditional construction.

Thus, from the outset, any land that is located in the National Agricultural Reserve (RAN), National Ecological Network (REN), protected areas or coastal areas should be excluded, since the construction limitations in these areas condition or make any project impossible.

Subsequently, it will be necessary to consult the Municipal Master Plan (PDM) of the municipality where the land is located, since this will be the instrument that will qualify the soil of the land (urban soils, urbanizable, rural soils, natural spaces, agricultural, etc. .).

2 – Construction of the modular house
Modular homes are often promoted as being less expensive than traditional construction homes. Its construction time is shorter and, once the project, plan, materials and finishes are defined, the budget will not be subject to significant changes.

However, it is important to consider that modular constructions require municipal licensing and, as such, these costs must also be considered, in addition to the construction and the purchase of the land.

It is also important to take into account that obtaining mortgage credit for this type of construction is more difficult and, generally, the applicable rates are higher and with shorter payment terms than those applied in traditional constructions or in the acquisition of an already built property.

3 - Licensing Process
The legal framework of modular or prefabricated houses is similar to that of traditional construction houses, so the licensing of this type of construction is mandatory.

Thus, before proceeding with the construction, prior information should be requested from the City Council where the house will be built, in order to guarantee the viability of the project. Subsequently, the architectural project - descriptive memory, plans, sections, elevations, and other elements - will have to be presented to the City Council of the municipality where the house will be built, and this process must take place before the assembly and construction of the work begins .

After the approval of the architectural project, the special projects must be presented - sewage, power supply and electrical distribution and gas installation - so that the City Council can consult the entities that must issue an opinion, authorization or approval, analyze the building and issue the building permit.

Only after the issuance of the construction license can the construction of the work proceed, and there must be a contractor who will be responsible for the work and the book of work.

Once the construction is completed, it will still be necessary to request the City Council’s urban planning services to issue a permit for the use license, which will take place after the inspections with a view to proving that the work carried out/constructed complies with the approved projects and water certifications. and sewers.

4 – Payment of taxes
Regardless of the type of construction - masonry, wood, prefabricated or modular - the municipal tax on real estate (IMI) is levied on the taxable value of rural and urban buildings located in Portuguese territory, so with the registration of the property with the authority tax and the issuance of the respective property booklet will lead to the payment of this tax annually.

It is therefore concluded that, although the construction of modular and prefabricated houses can be faster with regard to construction method and technology, the same does not happen with legal procedures, which will have response times and costs similar to those of a traditional building.

*Ricardo Pires Jordão, Real Estate Law Department at Belzuz Abogados S.L.P. – Branch in Portugal

Source: Idealista