New housing measures: tax relief and limits on impact.
- Redação Mudei e Agora
- 3 days ago
- 2 min read
The new housing measures package, approved in January 2026, is one of the most sensitive issues for the Portuguese real estate market. The reduction of VAT on construction for properties intended for long-term rental stands out as the most publicized point, lowering the rate from 23% to 6% in projects that place houses on the stable rental market.
For the sector, this tax change is a clear sign that the Government recognizes the urgency in reinforcing the rental supply and wants to make projects more financially viable. Tight margins, high financing costs, and still-pressured construction prices have led many developers to prioritize the sales segment, to the detriment of rentals. By easing the VAT, the State is trying to rebalance this equation.
Despite this, several real estate companies consider the measures "positive but insufficient." The central argument is simple: the housing problem in Portugal cannot be solved solely with tax incentives. Without regulatory predictability, faster licensing, legal certainty in contracts, and a clear framework of rights and duties for landlords and tenants, the appetite for investing in rental housing will remain limited.
On the developers' side, there is persistent concern about short political cycles and sudden changes in rules, especially in areas such as rent control or tax benefits. This regulatory risk is often more relevant than the immediate benefit of a reduced VAT rate. Structural rental projects require horizons of 10 to 20 years and financiers who believe in the stability of this framework.
Private owners, who represent a significant portion of the rental market, also view the package with some caution. The VAT reduction primarily benefits new projects and formal renovations, leaving out a significant portion of the existing stock. At the same time, issues such as foreclosures, delayed evictions, or contractual default continue to be perceived as high risks, discouraging the placement of more properties on the formal market.
Another critical front is informality. In many areas, especially in large cities, undeclared rentals remain a reality. Without a clear strategy to bring these contracts into legality – combining tax incentives, administrative simplification, and better oversight – the impact of the package will always be partial. The recent regulation on the requirement for proof of contract registration for advertising on digital platforms is a step, but still far from a complete solution.
For the market, the 2026 package should be understood as a "first step" and not as a final answer. At the product level, it opens up space for build-to-rent business models, student residences, regulated co-living, and professionalized rental portfolios, provided there is a long-term vision on the part of investors and banks. The integration of tax benefits, predictable licensing, and contractual protection will be crucial in transforming good intentions into concrete projects.
For real estate professionals, the opportunity lies in quickly interpreting the new rules and clearly communicating their impact to clients, developers, owners, and investors. Explaining how the VAT benefit works, what types of projects can benefit from it, and what the associated regulatory risks are can make all the difference in the decision to proceed with a project. More than ever, the advisory value of the mediator is reinforced.
Source: ECO – “New housing measures are positive but insufficient for real estate agencies”
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