Portugal starts 2026 with a wave of measures that directly affect housing costs, taxes and access to credit. From rent updates and new tax limits to mortgage fees and construction incentives, the changes will reshape decisions for tenants, landlords, builders and young buyers. Here’s a clear, practical summary of what changes and how they matter.
Top changes at a glance
• Rent update coefficient: 1.0224 (allowing up to a 2.24% increase from January 2026). Example: €700 → €715.68; €1,000 → €1,022.40. Landlords must notify tenants by registered letter at least one month in advance. Landlords who haven’t updated rents in three years may see cumulative increases above 11%.
• IRS rent deduction limit: increases from €700 to €900 in 2026, and will rise to €1,000 in 2027.
• “Moderate rent” concept: rents up to €2,300/month; property income tax reduced from 25% to 10% for contracts (new and existing) until 2029.
• Simplified Affordable Rental Regime: full IRS exemption for owners charging at least 20% below the municipal median, with minimum 3‑year contracts for permanent housing.
• Mortgages: variable‑rate loans reintroduce an early repayment fee of 0.5% on the amortised capital from January 2026.
• Young buyers: IMT and Stamp Duty exemption limit for first permanent home for buyers ≤35 rises to €330,539; state guarantee increased by €350 million to support up to 100% financing with state coverage up to 15% as guarantor.
• Construction & VAT: reduced VAT at 6% for new homes for sale up to €648,000 and for buildings for rent with rents up to €2,300/month; partial VAT refunds for owner construction.
• Licensing: Electronic Platform for Urban Procedures becomes mandatory from 5 January 2026 to speed up and standardise permits.
• IMI valuation: per‑square‑metre IMI value increases from €532 to €570, raising the base price to €712.50.
• Market outlook: housing prices expected to continue rising by 6–8% in 2026 due to supply constraints.What this means for tenants
• Expect modest rent increases if your landlord applies the 2026 coefficient; you must receive registered notification at least one month before the change.
• Higher IRS rent deduction: more renters will be able to deduct up to €900 of rent in 2026 (rising to €1,000 in 2027), easing tax burden for many households.
• If you live in a property rented at or below “moderate rent” levels (≤ €2,300/month), owners may benefit from lower taxation—changes that could influence market availability.What this means for landlords
• You can legally raise rents up to 2.24% using the new coefficient, with formal notification required. Those who delayed updates may apply accumulated increases but must check contract terms and legal limits.
• Reduced tax on property income (25% → 10% until 2029) makes renting more attractive, while the affordable rental regime offers full IRS exemption when rents are 20% below municipal medians and contracts run at least three years.
• Be aware of the reintroduced 0.5% early repayment fee on variable mortgages if you’re refinancing or repaying loans early.What this means for first‑time and young buyers
• The higher IMT and Stamp Duty exemption threshold (now €330,539) and the reinforced state guarantee (additional €350m, up to 15% coverage) increase the chances of buying without a large down payment.
• These measures aim to facilitate 100% financing options for eligible buyers aged 35 or younger buying their first permanent home.What this means for builders and the housing supply
• The 6% VAT cut for qualifying new homes and rental buildings, plus partial VAT refunds for self‑builds, are intended to encourage new construction and rental supply.
• Mandatory electronic licensing from 5 January should reduce municipal bottlenecks and speed up permit issuance—important for easing the supply crunch that is supporting price rises.
• Nevertheless, official forecasts still point to 6–8% price growth in 2026 because construction starts and permits remain limited.Practical steps to consider
• Tenants: check your lease, watch for the required registered notice, and review the new IRS deduction limits when filing 2026 returns.
• Landlords: verify contract clauses, notify tenants properly, and discuss tax regimes (10% property income tax vs simplified exemptions) with a tax adviser.
• First‑time buyers ≤35: confirm eligibility for IMT/Stamp Duty exemption and state guarantee; speak to lenders about 100% financing options and related conditions.
• Developers and homeowners planning construction: examine the 6% VAT rules and prepare for the new mandatory electronic licensing platform.Bottom line
2026 brings a package of tax, mortgage and administrative changes designed to ease first‑time access to housing, stimulate construction and moderate rental costs. While some measures reduce immediate costs for owners and buyers, supply constraints mean pressure on prices is likely to continue. Homeowners, investors and renters should act proactively—review contracts, seek professional tax or mortgage advice, and monitor municipal implementation of electronic licensing to benefit from the new rules.
