The approval of the 2026 Housing Package marked the start of a new phase for the Portuguese residential market, combining tax incentives and legislative changes with the aim of increasing the housing supply.
The new measures were analysed at a session held on 16 June, organised by CBRE and Morais Leitão, in partnership with APPII and other industry associations, with Vida Imobiliária as media partner.
Experts, market representatives and members of the Government discussed the impact of the measures on property development, lettings and planning permission.
Tax incentives to take effect from 2026
Under the theme “The new tax package for housing”, Raquel Maurício, João Fitas and António Queiroz Martins, coordinating associates at Morais Leitão, analysed the main tax measures set out in the legislation.
The amendments, introduced by Decree-Law No. 97/2026, cover various tax regimes and include incentives for the sale and letting of housing at moderate prices, new investment contracts for letting, the Simplified Affordable Letting Scheme and a reduction in taxation for participants in OIA schemes.
Key concepts within the new framework include the ‘Moderate Sale Price’, set at up to €660,982, and the ‘Moderate Rent’, set at up to €2,300 per month.
With regard to VAT, the new Budget Item 2.42.1 was introduced, which provides for the application of a reduced rate of 6% to construction or renovation works intended for sale as the owner’s own permanent residence or for residential letting, provided that certain requirements relating to prices, timeframes and the use of the properties are met.
Experts also pointed out that some of the measures are temporary in nature, generally remaining in force until 31 December 2029, although the eligible period for issuing invoices relating to the VAT benefit runs from 1 July 2026 to 31 December 2032.
With regard to personal income tax (IRS) and corporation tax (IRC), key features include taxation at a reduced rate of 10% and a 50% tax exemption on rental income for corporation tax purposes.
Investment contracts and affordable rental schemes take centre stage
Another topic under discussion was Investment Contracts for Rental, which may remain in force for up to 25 years.
The new scheme stipulates that at least 70% of the floor area of the projects covered must be allocated to residential letting, while the remaining area may be used for complementary purposes compatible with residential use. Rents charged may not exceed the limits set for moderate rents, and the properties must remain let for a minimum of eight months per year.
Among the benefits is also the possibility of exemption from Property Transfer Tax (IMT) and Stamp Duty on the purchase of land and buildings intended for construction, renovation or residential letting, subject to approval by the relevant local authorities.
The Simplified Affordable Rental Scheme, meanwhile, sets maximum rent limits based on 80% of the median rent published by INE for each municipality.
CBRE highlights reduced VAT as a transformative factor
CBRE also presented a case study on the Build to Sell model, highlighting the main constraints currently facing residential development, namely the scarcity of land, high construction costs, slow licensing processes and the tax burden.
According to the consultancy, a reduction in VAT could have a material impact on the economic viability of many projects, particularly in outlying market segments.
CBRE representatives argued that the measure could result in higher margins for developers, a reduction in the tax burden and an increase in the available housing supply.
Amendments to Legal Framework for Urbanisation and Construction to take effect in August
In the second part of the session, Rui Ribeiro Lima, a partner at Morais Leitão, analysed the amendments introduced to the Legal Framework for Urbanisation and Construction and the Legal Framework for Urban Regeneration.
The expert explained that the ‘Construir Portugal’ programme broadens the scope of operations subject to planning permission and reconfigures the prior notification regime, including certain land subdivision operations.
Urban development operations exempt from prior control were also discussed, such as certain maintenance works.
The amendments come into force on 3 August 2026. Among the positive aspects, Rui Ribeiro Lima highlighted the reduction in the time limits for declaring nullity or bringing legal proceedings. Among the less favourable aspects, he pointed to the “practical impossibility of applying tacit approval”.
APPII calls for an increase in housing supply
In the third presentation of the morning, Manuel Maria Gonçalves, CEO of APPII, analysed the impact of the new measures on the activities of property developers and investors.
“Only 2% of the housing stock consists of social housing. What has the State built over the last 10 years? In a country where 2% of housing is social housing, the answer is obvious,” he stated. Manuel Maria Gonçalves argued that the main way to solve the housing problem is by increasing supply.
For him, the reduction in VAT represents “the most visible victory” achieved by the sector, noting that “59,000 homes did not go ahead due to economic viability issues”.
The CEO of APPII also highlighted the importance of investment contracts for rental properties and expressed his hope that administrative processing times would be effectively reduced. “I want to believe that, as far as reducing processing times is concerned, this will not be merely superficial,” he said.
Government wants more supply, lower costs and greater access to housing
The session concluded with a speech by Cláudia Reis Duarte, Secretary of State for Tax Affairs, who set the measures within the context of the government’s housing strategy.
“It is important to share the priorities guiding the Government in this area. The legislation is not merely a set of tax measures: it reflects the decision to place housing at the heart of public policy, in order to address an urgent problem,” she said.
According to the minister, the aim is to increase the housing supply, stimulate private investment and make it easier for families to access housing. “The aim is to reduce costs, increase supply and improve access to housing. It is an ambitious and comprehensive tax package that covers everything from household income to corporate taxation,” she declared.
Cláudia Reis Duarte also emphasised that the tax incentives are designed to reduce the costs of construction and renovation, as well as to ease the financial burden on families when buying a home. “Housing policy should not be based solely on tax measures. The aim is to increase the supply of homes by mobilising both the public and private sectors,” she argued.
The minister concluded that the success of the strategy will depend on the coordination of different public policies and on the ability to mobilise all market stakeholders. “Without an increase in supply, we will not have affordable housing. Fiscal policy can and must help, but it will only work if it is coordinated. The goal is a challenging one: more homes, greater confidence and better access to housing for all Portuguese people,” she concluded.
