Horizontal Property: Multiply and Enhance Property Value through Strategic Division
- Ana Carolina Santos
- Nov 18
- 4 min read
The division of a property into autonomous units represents one of the urban operations with the greatest potential for enhancing and maximising real estate value in Portugal. The creation or alteration of horizontal property is not merely an administrative procedure — it is an investment strategy capable of multiplying a building’s value, creating new business opportunities, and meeting the growing demand in the housing and commercial markets.
This article clearly explains how the process of establishing and modifying horizontal property works, outlining the legal and technical procedures to follow, the conditions to meet, and the fiscal and registry aspects to consider for anyone wishing to increase the value of their assets through this process.
What is Horizontal Property?
Horizontal property is the legal regime applying when a building belongs to multiple owners, each holding exclusive rights over a specific part — known as an autonomous fraction — and joint rights over shared parts of the building.
Autonomous fraction: An independent unit, clearly distinct and isolated, with its own access to a shared area or the public road.
Common parts: Elements serving all units, such as staircases, lifts, roofs, façades, structural elements, and general utility systems.
This regime is regulated by Articles 1414 to 1438‑A of the Civil Code and by Decree‑Law No. 268/94 of 25 October.
Establishing Horizontal Property: Divide to Add Value
Creating horizontal property means splitting a building under full ownership (single owner and tax record) into several autonomous units, each forming a separate legal entity that may be sold or leased individually.
Common motivations:
Investment appreciation: A single-family building converted into several flats often achieves a higher combined market value than the original property.
Profitability: Enables the sale or leasing of individual units for multiple income streams.
Market alignment: Meets growing demand for smaller dwellings in urban areas.
Ease of sale: Allows partial sale or inheritance without selling the entire property.
Legal Requirements
For horizontal property to be created, each autonomous unit must be:
Independent: Functionally self‑sufficient.
Distinct and clearly defined: Spatially demarcated.
Physically separated: Structurally isolated from other units.
With independent access: Through a shared area or directly to the public road.
Failure to meet these conditions renders the creation act null and the building remains under co‑ownership.
Constitutive Title: The Defining Document
The constitutive title is the notarial document that legally establishes the horizontal property and identifies each unit.
Mandatory contents (Article 1418 of the Civil Code):
Description of each fraction and its corresponding building part.
Relative value of each unit, expressed in percentage or per mille.
Intended use of each unit (residential, commercial, services, storage, parking, etc.).
Description of shared areas.
Condominium regulations (if applicable)
The Significance of Per Mille (Permilagem)
Each unit’s per mille value expresses its proportion in relation to the total building value. Factors considered include area, dependencies, position, sunlight, and finishes.
Importance:
Determines the share of maintenance expenses each co‑owner pays.
Defines voting rights in the condominium assembly.
Influences the property’s taxable value.
Procedure for Creation
Architectural Design and Licensing – A qualified architect designs the division plan and submits it for municipal approval.
Execution of Works (if needed) – Must comply with standards for safety, habitability, fire protection, and accessibility (DL 163/2006).
Use Licence – Certifies habitability or authorised use and is required before registration.
Municipal Certification – Can be based on inspection or a certified descriptive report from a qualified professional.
Public Deed or Authenticated Document – Formalises the horizontal property legally.
Land Registry – Each fraction is registered with its own description and tax number.
Alterations to Horizontal Property
Existing horizontal property may be amended to reflect divisions, mergers, or changes in use of units.
Division: Splitting a flat into several units increases property count and total value.
Merging: Joining neighbouring units owned by the same person without altering common areas.
Change of Use: Converting commercial space into housing or vice versa, requiring municipal authorisation.
Technical Requirements
Each residential unit must comply with minimum standards from the General Urban Buildings Regulation (RGEU) concerning height, lighting, ventilation, and sanitary facilities. Acoustic, accessibility, and fire‑safety rules from relevant decrees also apply.
Economic Benefits
A strategically planned division can significantly increase property value:
Example:
A 300 m² single‑family house valued at €450 000, once divided into three T2 flats worth €200 000 each, reaches a total market value of €600 000 (+33 %).
Additional advantages:
Partial sale or rental flexibility.
Diversified revenue sources.
Increased overall profitability.
Fiscal and Registry Aspects
Individual Tax Records: Each unit receives its own property ID and tax record.
IMI: Municipal property tax charged per unit based on use and location.
IMT: Transfer tax due on sale of each individual property.
Stamp Duty: Applies to deeds of creation or alteration.
Practical Guidance
Before starting: Analyse the project’s economic viability and compliance with the Municipal Master Plan.
During the process: Hire experienced professionals and respect technical and legal standards.
After completion: Register each unit, notify the Tax Authority, and formalise condominium administration.
Key Reflection
Creating or altering horizontal property is far more than a bureaucratic formality; it is a powerful strategy for multiplying investment value. Success, however, depends on technical accuracy, legal compliance, and professional expertise. With proper planning, this process not only increases immediate value but also ensures long‑term profitability and adaptability to market trends. If you intend to enhance your real‑estate assets through the division of a building into autonomous units, professional guidance ensures safety, legality, and maximum return on your investment.
Do you wish to increase the value of your assets by dividing a building into autonomous units?
AC‑Arquitetos is available to assist you throughout the entire process — from the initial feasibility study and preparation of architectural and engineering projects to the completion of licensing, issuance of certificates, and formalisation of the constitutive title. With experience in the creation and modification of horizontal property projects and in‑depth knowledge of urban planning legislation and municipal procedures, we ensure that your project progresses safely, efficiently, and in full legal compliance, maximising the value potential of your investment. Contact us and rely on a team that transforms legal and technical complexity into a clear, professional, and effective solution to enhance the value of your property.
