In 2026, the Portuguese Government is pressing ahead with a new set of housing measures to address the housing crisis, building on the strategy launched in 2024 with the “Construir Portugal” plan and further strengthened throughout 2025, as described in detail in this article. While in recent years the focus has been largely on increasing supply, the new proposals adopt a more comprehensive approach, also centred on bringing existing properties into use and tackling structural bottlenecks within the market.
6% VAT on housing construction
Among the main changes is a revision of the conditions for applying the reduced 6% VAT rate to housing construction, now more specifically targeted at properties intended as a primary and permanent residence. This measure introduces stricter criteria, such as requiring the owner to occupy the property for a minimum period, and penalises cases of misuse through increased tax charges.
Breach of tenancy
In addition to this tax change, the Government is also introducing measures that directly affect the rental market, aiming to strengthen trust between landlords and tenants. Key changes include speeding up court proceedings in breach cases, allowing for quicker responses to non-payment, and enhancing the parties’ contractual autonomy.
Undivided inheritances
Another significant development concerns so-called undivided inheritances, one of the main factors keeping thousands of properties off the market. Under the new regime, it will be possible to expedite the resolution of disputes between heirs, including the use of arbitration and the creation of mechanisms that enable properties to be sold even in deadlock situations, thereby preventing a single heir from blocking the use of the estate.
More benefits for renting
Alongside these measures, a package of tax incentives has also been approved to stimulate the rental market. These include a reduction of the income tax rate on rental income to 10%, increased deductions for tenants, and exemptions from Property Transfer Tax (IMT) and Stamp Duty on the purchase of properties intended for residential letting.
Housing emergency fund
The Government also plans to establish a housing emergency fund aimed at supporting the most vulnerable, strengthening the State’s role in social response while seeking to relieve the private market of this responsibility.
Income tax exemption on capital gains reinvested in rental properties
The Government now plans for capital gains from the sale of properties to be exempt from income tax, provided the sale proceeds are reinvested in properties intended for residential letting. This measure aims to encourage owners to return homes to the rental market, while simultaneously promoting the modernisation and renovation of the existing housing stock.
Investment Contracts for Renting Scheme (CIA)
The Investment Contracts for Renting Scheme has been established, offering tax benefits for up to 25 years to investors who develop housing projects for rental purposes. The aim is to encourage long-term private investment, increase the supply of homes available to rent at affordable prices, and provide legal certainty for investors.
Simplified Affordable Renting Scheme (RSAA)
The RSAA introduces direct tax incentives for landlords who offer properties at affordable rents, including exemptions from income tax or corporate tax on rental income within set rent limits. This measure strengthens social housing policy, making renting more attractive and sustainable for middle- and lower-income families.
Tax benefits for vacant or second homes
To encourage the release of properties currently off the market, the Government has stipulated that those who sell vacant or second homes and use the proceeds to purchase homes for rental at controlled rents (up to €2,300 per month) will be exempt from capital gains tax. This initiative aims to reduce the number of empty homes and stimulate the existing residential market.
Promotion of the Build to Rent model
The 2026 tax package emphasises the Build to Rent model, encouraging the construction of new properties exclusively for rental. Through tax incentives and streamlined procedures, the Government aims to make this approach more appealing to private developers, ensuring a steady supply of new homes at affordable rents and contributing to the stability of the rental market.
These measures create opportunities for those looking to buy or rent a home through traditional channels and encourage landlords and investors to bring properties onto the market. At Casas do Barlavento, we see these changes as a way to energise the property sector, increasing the supply of quality housing and making it easier to find stable and affordable solutions for families and residents in the region.
