Increasing the supply of housing on the market for the middle class is the solution pointed to by the Government and by the various players in the real estate sector to respond to the housing crisis being experienced in Portugal — or the housing access crisis, as many experts refer to it. The Executive, aware of the problem, saw a fiscal package approved in Parliament, in general terms, with measures that promise to change the residential landscape, such as the reduction of VAT to 6% on construction. What impact will the announced proposals actually have on the real estate sector? We answer this and other questions with the help of specialists.
It should first be noted that the Government’s new fiscal package to address the housing crisis provides, in broad terms — click this link to find out what could change — tax relief to encourage rental housing, construction at moderate prices, and changes to licensing, urban planning, and urban rehabilitation. This plan was approved in Parliament on January 9, 2026, in general terms.
As we explain in this article, the Government’s legislative authorization proposals will now move to the respective specialty committees. That is, they will be analyzed by members of Parliament and may undergo changes proposed by opposition parties. Only after this process is validated will the proposals be sent to the President of the Republic for promulgation or veto, culminating in publication in the Official Gazette.
Is the fiscal package good news for the real estate sector?
Will the €2,300 rent cap have an impact?
Stability as the watchword
The fiscal package “helps, but does not solve”
Are the measures sufficient to increase supply? “We’ll see”
Rents between €2,300 and €2,760 will “tend to disappear”
“A historic moment for the country,” say developers
“A decisive step” to resolve a “structural blockage”
“The beginning of a path that will need to be continued”
Doubts regarding how the benefits will be operationalized
Is the fiscal package good news for the real estate sector?
Real estate development in Portugal
Freepik
“The approval of the fiscal package proposed by the Government in the Assembly of the Republic, even though only in general terms so far, is good news for the real estate market. Not because of the measures themselves, but because of their framing within an even broader package of measures,” begins Gonçalo Nascimento Rodrigues, a real estate finance specialist, in comments to idealista/news.
According to the consultant, solutions to improve housing affordability are not limited to fiscal measures. They are important, “but they should be viewed and analyzed within a much broader framework,” he states. “Believing that the implementation of fiscal measures will, by itself, promote an increase in supply may be optimistic and fail to produce the desired effects. Fiscal measures must be well calibrated and aligned with clear objectives,” he continues.
Among the proposals presented by the Executive, he nevertheless highlights the fiscal measures related to the rental market, stressing that he has always believed it to be “an integral and fundamental part of improving housing accessibility.” “Whether in terms of personal income tax or with regard to dividends distributed to participants in investment vehicles, the measures now approved are very important for the market,” he explains.
“Additionally, the exemption from capital gains tax in cases of reinvestment in rental properties is also a measure worth highlighting. In fact, I consider the capital gains tax regime, as it is currently designed, to be a major obstacle to increasing supply in the market. Therefore, measures that enhance capital gains tax exemptions while simultaneously seeking to stimulate the rental market are very welcome,” he adds.
Will the €2,300 rent cap have an impact?
Regarding the introduction of a €2,300 cap for the purpose of defining moderate rent, he anticipates that it could, in theory, generate perverse effects in the market: “Such a high rent limit for obtaining tax benefits may lead landlords to try to increase rents up to the maximum level the market can bear, when a measure of this nature should aim for the opposite objective.”
“Such a high rent limit for obtaining tax benefits may lead landlords to try to increase rents up to the maximum level the market can bear, when a measure of this nature should aim for the opposite objective.”
Gonçalo Nascimento Rodrigues, real estate finance specialist
With regard to the reduction of the VAT rate on construction to 6%, Gonçalo Nascimento Rodrigues believes that “the application of a maximum cap of €648,000 may lead the market to produce homes priced closer to that value, leaving behind a segment that can only afford significantly lower prices.” “If that happens, the goal of improving housing affordability may be undermined,” he warns.
Stability as the watchword
Buying and selling a home in Portugal
Freepik
Responding to the same question posed by idealista/news, Massimo Forte says this is a moderately positive piece of news, always depending on the capacity to implement the measures.
“The approval of a fiscal incentive package always sends a positive signal: stability. And in a market driven by long-term decisions by families, investors, and developers, fiscal predictability is almost as valuable as the incentives themselves, because it promotes greater confidence — which is essential for the real estate market — and that alone already represents half the journey,” says the real estate consultant, coach, and trainer.
The fiscal package “helps, but does not solve”
According to Massimo Forte, some of the approved measures ease the tax burden at critical moments in people’s lives, such as purchasing a first home, residential mobility, or family reorganization, which can help “unlock decisions that might have been on hold.” However, he warns against confusing tax relief with a structured housing policy. “The package helps, but it does not solve. The major problem in Portuguese real estate remains the same: a shortage of adequate supply, especially for the middle class. Without more construction, more rehabilitation, and faster urban planning processes, any tax incentive risks being absorbed by prices,” he stresses.
“The major problem in Portuguese real estate remains the same: a shortage of adequate supply, especially for the middle class. Without more construction, more rehabilitation, and faster urban planning processes, any tax incentive risks being absorbed by prices.”
Massimo Forte, real estate consultant, coach, and trainer
Another positive aspect, the specialist highlights, is the message sent to national and international investors that “Portugal continues to be a country that does not demonize real estate.” This signal of confidence must, however, be reinforced not only through taxes, “but with greater political coherence, stable rules, and a medium- and long-term vision.”
In a more detailed analysis of the measures approved in Parliament, Massimo Forte emphasizes that both the reduction of VAT on construction to 6% and the reduction of rental taxation [for landlords, from 25% to 10%] are very welcome. He explains: “If applied with a focus on returns for people and not just investors, they may improve accessibility by enabling the supply of products at better prices, especially rental products, which need to become more affordable.”
In the specific case of the VAT reduction on construction, he says he doubts that the tax differential compared to the previous 23% rate will impact prices, believing that, at best and in some cases, it may help stabilize them.
Regarding the new real estate brokerage law — which the Government promised for early in the year — Massimo Forte notes that it “could be a strong help in bringing more confidence and professionalism” to the activity. Left in the drawer was an initiative that could help curb more speculative movements. “The Government could already act and limit the number of contractual position transfers, encouraging long-term investment by those who truly create value for the market and for people,” he adds.
Measures sufficient to increase supply? “We’ll see”
Homes in Lisbon
Panoramic view of Lisbon
Getty Images
Without mincing words, economist Vera Gouveia de Barros considers that the approval of the fiscal housing package “is certainly good news,” provided that one understands the “real estate sector” as those who build, sell, and place homes on the rental market.
These are measures that “represent tax relief, that is, a reduction in costs,” she comments, noting that she therefore believes they have been well received. “Whether they will be sufficient to increase supply and, through that, allow more people to access housing with better economic affordability indicators, we will see.”
Rents between €2,300 and €2,760 will “tend to disappear”
The specialist does anticipate changes in the rental market: “There will certainly be an effect in the rent range between €2,300 and €2,760 — they will tend to disappear, because if you charge those amounts and pay a 25% tax, it is better to lower the rent to €2,300 and pay only a 10% rate; you earn more. But this impact is quite limited.”
Vera Gouveia de Barros also highlights the simplification of the Rental Support Program (formerly the Affordable Rent Program). “It continues to have the main problems I have mentioned on other occasions,” she says, emphasizing that it “becomes much less attractive” with the reduction in the tax rate for landlords who charge rents up to €2,300. “Even so, a number of requirements that I considered unjustified have been eliminated,” she maintains.
“I do not understand why this package was not used to exempt capital gains on the sale of second homes when the proceeds are applied to a primary permanent residence.”
Vera Gouveia de Barros, economist
Other measures that the economist considers relevant were left out — or not considered by the Executive — such as revising the taxation of room rentals. “More than 25% of vacant homes in the country have five or more rooms; in the Lisbon metropolitan area, it is more than 60%; over 50% in Porto; in Amadora, half have 10 or more rooms. With these typologies, room rentals seem more appropriate, but they need to be treated differently from renting an entire dwelling,” she warns.
“I also do not understand why this package was not used to exempt capital gains on the sale of second homes when the proceeds are applied to a primary permanent residence,” she concludes.
“A historic moment for the country,” say developers
Reduction of VAT on construction
Freepik
And from the real estate development side, how are the housing changes planned by the Government being received? For Manuel Maria Gonçalves, CEO of the Portuguese Association of Real Estate Developers and Investors (APPII), the approval of the fiscal package “is excellent news and could mark a historic moment for the country.”
“By combining tax incentives with licensing simplification measures, real conditions are created to unlock a structural problem: the lack of housing supply. These measures restore predictability and confidence to the market, essential factors for attracting investment and accelerating the production of new homes,” he argues.
The same official issues a warning, however, assuring that for “this progress not to remain merely on paper, it is essential to ensure rapid implementation, with clear, simple rules and broad applicability,” in order to avoid “excluding projects already underway.” “Only then will we be able to transform this decision into a lever for competitiveness, territorial cohesion, and the future.”
“If the Government and the Assembly of the Republic maintain the courage shown so far, Portugal may finally take a decisive step toward resolving the structural blockage in housing.”
Manuel Maria Gonçalves, CEO of APPII
The association highlights a long-standing demand: the reduction of VAT to 6% on construction and rehabilitation works intended for sale or rental, which could have a direct impact on the economic viability of projects and, consequently, on final prices for families. “We also emphasize the reform of the Legal Framework for Urbanization and Building (RJUE), which promises to reduce deadlines and simplify processes — something critical to accelerating housing production,” adds Manuel Maria Gonçalves.
“A decisive step” to resolve a “structural blockage”
The CEO of APPII nevertheless laments the absence of a definitive timeline and simple mechanisms to ensure immediate and automatic execution of the measures.
Regarding the VAT reduction, he considers it essential that the legislation be finalized without ambiguities and with objective eligibility, so as not to exclude most projects under development. And he leaves a message: “Without these guarantees, we risk compromising public policy objectives and frustrating the expectations created. If the Government and the Assembly of the Republic maintain the courage demonstrated so far, Portugal may finally take a decisive step toward resolving the structural blockage in housing.”
“The beginning of a path that will need to be continued”
Homes in Porto
Panoramic view of Porto
Freepik
On the ground, building and developing residential projects, particularly for the middle class, is the real estate developer AM48. Francisca Martins, a board member of the AM48 Group, also considers the approval of the fiscal package to be positive news, especially for the signal of stability and political priority it sends to the sector. “In a capital-intensive market with long cycles, simple, clear, and short-term executable measures are essential to reinforce confidence and enable investment decisions,” she summarizes.
She is keen to note, however, that there is still a long way to go to achieve the necessary increase in housing supply, since housing problems are structural and cannot be resolved solely with a fiscal package. “But this set of measures represents an important change in approach and creates conditions for developers and investors to move forward again with projects and with more housing construction. We know this is only the beginning of a path that will need to be continued, with other instruments and complementary reforms, but starting by creating predictability and confidence is an essential step — and that step has been taken,” she reflects.
“This set of measures represents an important change in approach and creates conditions for developers and investors to move forward with new projects and with more housing construction in Portugal. We know this is only the beginning of a path that will need to be continued (…)”
Francisca Martins, board member of the AM48 Group
Among the measures to highlight, she points to tax relief, particularly the reduction of VAT on construction and rehabilitation, which may have a real impact on costs and, consequently, on final house prices.
Doubts about how the benefits will be operationalized
However, important doubts remain regarding how these benefits will be operationalized. She clarifies: “Many developments, including those by AM48, include very diverse typologies, from T1 to T4, some below and others above the defined limits. It is essential to clarify how the benefit will be allocated and to avoid solutions that introduce excessive complexity or distortions in urban design. If the tax benefit applies only to residential units and does not include common areas, green spaces, or the quality of the surroundings, we risk encouraging more square meters of housing but less quality of life and less city. Fiscal policy must be aligned with how we want to plan and build neighborhoods in the future.”
One measure that remains unimplemented, which Francisca Martins considers critically important, is financial instruments that allow projects to be unlocked in their early stages. “Today, the equity capital and pre-sales requirements demanded by banks are so high that they exclude a large portion of developers, especially mid-sized ones. Promoting public guarantee mechanisms or risk-sharing solutions to, for example, finance project costs, licensing, and initial construction would have an immediate impact on the ability to place more supply on the market, without compromising the stability of the financial system,” she concludes.