Faro: Coobital celebrates 50 years and criticizes lack of political will to solve housing crisis

With over 2000 homes built, around 1300 in the city of Faro alone between 1982 and 2008, Coobital – Cooperativa de Construção e Habitação Económica Farense , has reasons and a solid history to celebrate the 50th anniversary of its foundation , on Saturday, May 10th.

“Our cooperative has been affiliated with the National Federation of Housing Cooperatives ( FENACHE ) since it was established, so we have access to and constantly share what we do with government entities, whether at the central government level or at the municipal policy level. We have had several crises, especially the subprime crisis in 2008, and soon after, the COVID-19 pandemic. All of this has served to create some cushions for those responsible” for solving the housing problem that has taken hold in the country, says Orlando Vargas.

At the same time, large real estate funds were setting up shop in the country and initiatives such as the Golden Visas emerged. “I am not against it, but I believe that if all this has given some strength to the Portuguese economy, then the results of this strength should be applied to Controlled Cost Housing (HCC),” he says.

«Since the last residential building comprising 18 homes in the Santo António do Alto Urbanization, in Faro, completed in 2008, 17 years ago, we have not built anything else. Mainly due to a lack of land and support from official entities so that cost-controlled programs could once again be a solution for families who are unable to access the supply» in the current market, which seems to be increasingly focused on the luxury segments, and on supply for investment, especially foreign investment.

Orlando Vargas argues that the cooperative rental market would be “fundamental” in helping to resolve the current crisis.

"And not just for permanent housing. It would help young people, students, temporary workers and those most in need who do not meet the criteria for social housing provided by the local authority," he says.

“We want, and have made several proposals since the 1980s, for cooperatives to be able to build houses for rent at a good price, with truly affordable rents, in the rental market. There is legislation for this, it has been approved, it exists, but the banks do not finance us in the long term. They only finance the end customer, not the entity”, he begins by explaining.

However, demand is such that he gives a recent example: “we sold a shop that we had no shortage of. The law now allows commercial spaces to be converted into housing. The owner hasn’t even finished the work yet and he already has everything he rents out, to doctors, nurses, people who come to work here. He rents the rooms for 450 euros a month and it’s already full.”

Therefore, “the idea was for the cooperative to build and rent the apartments to its members, managing the entire process and paying off the debt,” he says. The construction cost is paid for both in the sale and in the rental. It’s the same thing,” he compares.

The problem is that banks don't finance this type of project. Why? "They probably aren't interested. If there was a will, it could be resolved."

«The only possibility would be for the State to provide the Housing and Urban Rehabilitation Institute ( IHRU ) with the conditions to provide financing and put pressure on Caixa de Geral de Depósitos, which is a public bank», to guarantee the necessary funds.

“I believe so, but there would need to be a great deal of political will,” he stresses.

And even then, the glass would only be half full. “It is not possible to buy land at around 50 or 60 thousand euros per fraction, which are the prices that the market is charging, and then make HCC. That is impossible.”

«Land for HCC has a value set by law, it cannot exceed 12 percent of the cost of the apartment. The municipality will have to donate the land for this purpose».

In the view of cooperative member Orlando Vargas, the most recent low-cost housing project, “Casa Nova” , a project undertaken during the term of President Rogério Bacalhau (PSD), was a real estate operation.

The municipality sold the land to the construction company Ferreira Build Power, and the work was financed by Santander, as reported by Barlavento .

The IHRU set the price per square meter based on capital gains and, after the draw, many of those selected were unable to obtain a loan due to the high price of the properties.

Vargas recalls that in 1988, Coobital had already tried to buy from Rodoviária Nacional the land where the Calouste Gulbenkian Urbanization is today, with controlled costs, built during the time of mayor José Apolinário (PS).

«The cooperative wanted to buy it. We submitted a proposal, but the land was ultimately purchased by Faro City Council during the time of Mayor Luís Coelho, with the sole objective that only HCC could be built there».

But there were still “two lots left to build on, because it was necessary to draw up a detailed plan for the entire Lejana area. I followed the whole process with the expectation that these future 90 homes would be ours. When President Bacalhau was elected last time, I asked for a meeting, we presented the idea, as is normal, and he referred the matter to the housing councillor. 15 days later, we saw the notice to sell the land” to private parties.

«Therefore, Faro City Council's housing policy over the last 20 years has been a disaster».

Vargas acknowledges that the municipality has also “gone through difficult times in economic and financial terms. But it has had a surplus for a long time. There was no interest in tackling this problem. I am not making any criticisms or any kind of political analysis. This is my opinion,” he says.

“There was no real investment. There wasn’t any. And we ended up suffering the consequences, because we didn’t have any support either,” he laments.

On Faro City Day, September 7, 2024, during the inauguration ceremony of two blocks of Controlled Cost Housing (HCC), next to Estrada Senhora da Saúde, Rogério Bacalhau, Mayor of Faro, asked the then Minister of Infrastructure, Miguel Pinto Luz, for help in finding land for more identical projects and expanding the city's urban perimeter .

Vargas acknowledges that the municipality “does not have land reserves”, but in 1990, when the Municipal Master Plan (PDM) was approved, “there was a directive. It stated that in all licensed subdivisions, 10 percent of the construction would have to be allocated to HCC housing”.

“After that, I saw so many urban developments approved. In Lejana , for example, I don’t see any houses with controlled costs. But the PDM requires that this would have to be complied with. To this day, I haven’t seen any houses built, either by the City Council, by cooperatives, or by anyone, unless this regulation was banned from the PDM”, however.

When asked about the new Land Law , which provides for urban expansion into areas that were previously unbuildable, he replied: “We agree, as long as these areas are designated for HCC. That was not included in the law. Accessible housing was defined. Well, as long as there is a ramp at the door, the entire house is accessible,” he said ironically.

«Look, the Penha, Lejana and Intermarche subdivisions are huge. If you take that gross construction area and subtract 10 percent, you have a series of plots of land to build HCC».

There are two questions that need to be asked in this interview. Would the current housing crisis be fertile ground for the work of cooperatives? And what is the future of cooperatives in this sector?

“Yes, it would. And we have thought a lot about this. Every time a government falls, and this has been happening frequently, we present proposals. The Federation has listed 60 measures for housing, proposed by the various parties with seats in parliament that are now running in the legislative elections. If they could implement two or three, that would be good. They say that everything is in order, but so far, everything has remained on paper,” he reiterates.

For example, during the last socialist government, “we had several meetings with Pedro Nuno Santos when he was Minister of Infrastructure and everything was fine. Now he argues, and perhaps with some reason, that the work has been interrupted.”

And “whenever there are local elections, we hold these meetings and make our cooperative available to all candidates.”

What is certain is that “the cooperative’s main activity has come to a standstill. Our current project is social, cultural and sporting. We have set up the Algarve Foundation for Social Development, which invests in education and is extremely important for the city. Our focus now is to create conditions for young people, with a daycare and kindergarten, to maintain our employees, the structure, the current accounts and not owe anything to anyone.”

And "hope that someone remembers that we once had a happy past. We always hope that an opportunity will arise to make our contribution to help solve the housing problem."

Today, “we believe that the work we have already carried out, especially in the city of Faro, deserves more attention from the authorities, both state and municipal. It is also worth mentioning that in all the housing developments, only in Carreira de Tiro and Santo António do Alto was there any support from the local authority. In addition, all the land was acquired from private individuals without any kind of support”, he says.

Regarding the question about the future, he recalls that “the beginning of the cooperative was a very dynamic, very interesting process. I remember calling meetings where I had to close the door because there was no more room. But then, from a certain point onwards, the enthusiasm of April began to wane. People began to be more selfish, more calculating. The whole society changed. And the meetings began to become empty.”

Ten years ago, “we created the Youth Group at FENACHE. The cooperatives that had the means to do so nominated someone. In practice, this was already thinking about the future. But today, I cannot criticize young people for not embracing this because of all the difficulties I mentioned.”

Still, when he looks back, “it was all worth it. I don’t feel completely fulfilled, but I feel like a different man. I came here when I was 23, as a member, in 1979. I was in the Air Force, I signed up and after two or three years, I became a director. The cooperative was on the verge of being closed down, as there was no land (as there is today) to build on. I volunteered to join a work group. At the end of the year, the Council had ceded the land of the old Shooting Range. I started young and, in practice, I learned to be a man here. I regret almost nothing of what I did”, he concludes.

Coobital has never been a competitor to traditional real estate. “Even when there was a lot of construction, there was room for everyone. Our homes were always decent and of great quality”, but they were different from the traditional market.

“Cooperatives are made up of people. And that hasn’t changed. The cooperative code is clear, objective and very pragmatic. A group of five people can form a cooperative. What’s happening today is that there are real estate project management companies that are using this model” to get the best of both worlds.

“It’s very simple. The cooperative pays six percent VAT on construction. It doesn’t pay property tax (IMI) or property tax (IMT). When the houses are finished, the cooperative is dissolved. All the profits go to the construction management company, which charges a percentage to manage the process. And it takes the biggest slice of the pie . In the end, people buy the houses and don’t want to know anything else. This is legal,” he explains.

This type of operation, “may not inflate the price of houses much”, but it has a social cost.

“Look, with the equity from the results of the Reserve and Construction Fund for the houses we built, we have a headquarters that is at the service of our members. Every day there is gymnastics and dancing here, and there is an associative movement that supports various sports, such as cycling, cycle tourism and mountain biking. It is all the result of our work. Companies don’t do these things, as is normal, they only want profit,” he explains.

How can this be stopped? “We believe that they should not be called cooperatives. Cooperatives have a different scope. They are third sector entities and are clearly defined in the legislation. Anyone who does not respect or follow this path is not being right. What we want is for conditions to be created for cooperatives to work and, naturally, if they are on the ground acting, these structures have no life and are not successful.”