Portugal’s Council of Ministers has approved a package of sweeping reforms aimed at stimulating the rental market, attracting investment, and increasing the country’s housing supply.
Build-to-Rent Gets a Boost
A key feature of the new measures is a favorable tax regime for Build-to-Rent projects. Developers will benefit from a reduced 6% VAT rate on construction, in addition to full exemptions from both Municipal Property Transfer Tax (IMT) and Municipal Property Tax (IMI) for the first eight years of operation. Furthermore, a 5% rate will apply for income distributions in Real Estate Investment Units (CIUs), making rental housing construction more attractive to investors.
Tax Relief for Affordable Rentals
Aimed at encouraging more affordable rental offerings, properties marketed for rent up to €2,300 per month will be exempt from the current Additional IMI (AIMI) tax. Reinvesting capital gains into moderately-priced rental housing will also be exempt from capital gains tax, providing another incentive for housing reinvestment.
Stricter Rules for Foreign Buyers
To address housing accessibility concerns for locals, the government has increased the IMT property transfer tax for non-resident homebuyers, with the exception of Portuguese emigrants. The hope is that this step will alleviate pressure on housing demand from international investors, keeping more properties accessible for residents.
Streamlined Licensing and Digitalization
The Council of Ministers also approved the Draft Law for legislative authorization to simplify municipal licensing procedures. This revision will amend the Legal Regime for Urbanization and Building (RJUE), reducing bureaucracy and speeding up the approval process for new housing construction. Additionally, the launch of the PortugalBIM initiative marks a decisive shift towards digitalizing planning and construction—with the goal of further streamlining these processes.
Support for Construction Workers and Future Reforms
New temporary accommodation requirements for displaced construction workers are also part of the approved measures, reflecting the effort to support the industry as a whole.
Looking ahead, the government announced that further reforms are on the way. Future proposals will target issues within the urban lease regime and rules regarding undivided inheritances, all aimed at boosting the housing supply in the coming months.
These robust measures underscore Portugal’s commitment to promoting affordable and accessible living while modernizing its housing sector. The changes are expected to energize the Build-to-Rent market, provide tax relief for affordable rentals, and speed up project timelines—offering hope for prospective renters and investors alike.
