Source: Adobe Stock Author: Redaction Rental as a structural response Access to housing has become one of the greatest structural challenges in Portugal. The surge in purchase prices, combined with incomes that do not keep pace, has left a significant portion of the population outside the traditional market. In this context, rental housing plays a strategic role in addressing the crisis and promoting greater balance. Historically, the country prioritised home ownership, relegating rental housing to a secondary role. This culture of ownership contributed to a limited rental market, long associated with precarious contracts. However, the current context requires a shift in approach. Rental housing must be seen as a stable, secure solution compatible with medium- and long-term life plans. The consolidation of rental housing depends on greater supply, clear rules, and legal predictability. A robust rental market eases pressure on home purchases and offers alternatives for young people, families, and mobile professionals. It also provides flexibility in an increasingly dynamic labour market. New tenant profile and rental models The profile of rental seekers has also evolved. Today, tenants value energy efficiency, strategic locations, integrated services, and transparent contracts. Modern rental housing requires construction quality, professional management, and reduced bureaucracy. It is not just about providing homes but creating housing solutions suited to current needs. In this context, purpose-built rental developments gain relevance. These projects increase supply at scale and quality, ensuring stability for both investors and tenants. Strengthening rental housing through public-private partnerships can accelerate availability and create a more reliable market. Still, the success of rental housing depends on alignment with wage levels. The gap between average incomes and market prices undermines rental sustainability. If the financial burden is too high, the model loses effectiveness as a response to the housing crisis. Public rental and social balance A healthy rental market requires a diversity of supply. Beyond private initiatives, it is essential to strengthen public rental housing, providing accessible solutions for low- and middle-income families. Public rental plays a key role in promoting social cohesion and reducing inequality. Strengthening rental housing must integrate urban planning, investment incentives, and balanced fiscal policies. Regulatory stability is equally crucial to build confidence in the rental market and attract long-term capital. The housing crisis cannot be solved by a single measure. It requires strategic vision and consistent commitment. When structured with quality, scale, and the right framework, rental housing can form a central and sustainable solution. By embracing rental housing as an essential part of housing policy, Portugal can move towards more inclusive cities and a balanced, resilient market.
Source: Adobe Stock Author: Redaction Revocation of extraordinary rental support The Government has decided to revoke the extraordinary rental support (PAER), recognising flaws in the programme’s design and irregularities in the allocation of benefits. The measure follows the Ombudsman reporting delays and issues that severely affected beneficiaries, especially the elderly. The revocation aims to create a new rental support programme, more efficient and adapted to the needs of tenants and landlords. According to the office of the Secretary of State for Housing, Patrícia Gonçalves Costa, the draft decree is being finalised and aims to improve the effectiveness and speed of service, ensuring that support reaches those who really need it. Adjustments to compensation for landlords with old rents In addition to revoking PAER, the Executive is reinforcing the compensation mechanism for landlords with old rents. By January 2026, almost all applications had been paid, but digital and design flaws remain that require attention. To address these gaps, the Government is implementing an automated pre-assessment system and intensifying in-person support at the Institute of Housing and Urban Rehabilitation (IHRU). These measures aim to reduce delays, speed up processing, and improve communication with applicants, including elderly landlords with digital difficulties. Measures to optimise rental support The Executive is now focusing on three main areas: 1. Recovering payment delays, ensuring that beneficiaries receive pending support. 2. Restructuring the IT system, allowing greater automation and preliminary analysis of applications. 3. Strengthening in-person support, ensuring assistance to all beneficiaries, especially those most reliant on direct support. These actions aim to create a fairer and more functional rental support model, correcting historical flaws and increasing confidence in the housing system. The expectation is that, with these changes, rental support programmes will become more efficient, transparent, and adapted to the reality of citizens in Portugal.
Source: Adobe Stock Author: Redaction Supply of houses for rent grows 11% The market for houses for rent in Portugal shows signs of strengthened supply. Over the past year, the available stock rose by 11%, reflecting a greater availability of houses for rent, especially in the main urban centres. This increase comes in a context of adjustment in the rental market, marked by slight decreases in rents and tax changes that may encourage new landlords to put houses for rent on the market. The reduction in the IRS rate on rental income, included in the tax package approved in Parliament, may help reinforce landlords’ confidence. For those looking for houses for rent, this growth in supply represents more options and greater room for choice, although the balance between demand and availability continues to vary depending on location. Major cities with more houses for rent The supply of houses for rent increased in 14 of the 17 district capitals analysed. Coimbra leads the rise, with growth of 47%, followed by Aveiro (45%), Ponta Delgada (33%) and Vila Real (32%). Faro (24%) and Leiria (23%) also recorded significant increases. Lisbon and Porto posted a more moderate rise, both at 11%, while Setúbal and Viseu grew by 10%. Braga, Castelo Branco and Guarda also followed this positive trend. These figures show that houses for rent are returning to the urban market, strengthening the available stock in cities with greater economic and academic dynamism. Declines in districts and islands Despite growth in the major cities, the district-level reality reveals a different scenario. In most districts and islands, the supply of houses for rent decreased over the past twelve months. Madeira stood out positively, with an increase of 13%, while Évora recorded growth of 3%. In Faro, the stock remained stable. On the other hand, significant declines were observed in Guarda (-35%), Aveiro (-27%) and on the island of São Miguel (-27%). Coimbra, Braga and Vila Real also recorded notable decreases, as did Lisbon (-10%) and Porto (-8%) when analysed at district level. What to expect from the rental market The increase in houses for rent in the major cities may relieve some of the pressure felt in recent years. However, regional differences remain marked, with distinct patterns between urban centres and lower-density territories. The evolution of taxation, the economic context and demand dynamics will be decisive in determining whether the stock of houses for rent will continue to grow in 2026. For now, the data point to a strengthening of supply in the main cities, although the rental market remains uneven at national level.
Source: Adobe Stock Author: Redaction Renting a home requires record effort Renting a home in Portugal continues to represent a very heavy burden on household budgets. At the end of 2025, the average affordability rate for renting a home reached 80% of disposable income, exceeding the burden associated with buying a home with a mortgage, set at 70%. Among the main cities, Funchal leads in the effort required to rent a home, with 93% of income allocated to rent. It is followed by Faro, at 90%, and Lisbon, at 84%. Porto (69%) and Setúbal (67%) also show high levels, confirming that renting a home is particularly demanding in major urban centres. Other capitals such as Ponta Delgada, Braga, Aveiro, Viana do Castelo, Évora, Santarém and Leiria record affordability rates above 50%, showing that renting a home remains above recommended levels for most families. Buying a home remains above recommended levels Buying a home in Portugal also implies a significant affordability rate. In Lisbon, the affordability rate for buying a home reaches 113%, meaning that the average income does not cover the monthly mortgage payment. In Funchal, the figure rises to 102%, while Faro stands at 97%. Cities such as Aveiro, Porto, Braga and Viana do Castelo maintain high levels in home buying, although lower than those recorded in the capital. Overall, buying a home remains above the prudent 33% threshold in most major cities. More affordable markets for renting and buying Despite the widespread pressure, there are markets where the affordability rate is more balanced. For renting a home, Bragança, Beja and Castelo Branco show the lowest figures. Guarda and Portalegre are close to the recommended limit. When buying a home, six district capitals stand out with affordability rates equal to or below 33%: Guarda, Portalegre, Castelo Branco, Beja, Bragança and Vila Real. In these markets, buying a home proves relatively more affordable compared to available income. How the affordability rate is calculated The affordability rate measures the percentage of net household income allocated to housing. In renting, it corresponds to the annual weight of rent in the average household income. In buying a home, it considers the annual mortgage payment based on average market conditions. This indicator is essential to assess the sustainability of renting a home or buying a home and to understand the real impact of housing costs on Portuguese household budgets.
Source: Adobe Stock Author: Redaction Home purchase still possible Beja stands out among the Portuguese district capitals for allowing families to acquire homes with areas over 90 square metres without exceeding the recommended effort rate of 33% of household income. This situation places Beja among the few markets outside major urban centres where buying remains accessible in terms of space and costs. In contrast, cities such as Lisbon, Porto or Faro limit acquisitions to significantly smaller properties, forcing families to commit higher incomes or considerably reduce the size of the home. Beja thus maintains a relative advantage in the purchase market. Renting in sharp decline In the rental market, the situation is more concerning. In 2025, only Guarda and Portalegre allowed renting houses of 90 square metres or more within the recommended affordability. In Beja, the decline is marked: homes that previously reached 130 square metres now fall to around 70 square metres. This reduction highlights the growing gap between rising rental prices and average household incomes, making access to quality housing with adequate space increasingly difficult, even in regions where purchasing is still viable. Trend of increasingly smaller homes Overall, the national market shows a clear trend: both in renting and buying, families get less and less space for their money. This phenomenon reflects the increasing pressure on salaries in the face of rising housing costs and demonstrates the market’s limitation in providing homes compatible with the recommended family size. The result is that, even outside major cities, the areas accessible for renting or buying are decreasing, making it necessary to rethink housing policies and incentives that can balance prices and affordability. Buying remains more advantageous than renting Despite rising housing prices, buying a house is still, in many district capitals, more advantageous than renting. Monthly costs can be up to 45% lower than rent, although this difference is gradually decreasing due to rising acquisition costs. In Beja, this dynamic keeps buying as a financially more sustainable option, but the limited rental market with reduced areas highlights the need for measures that promote affordable housing suitable for families across all regions of the country.
Source: Adobe Stock Author: Redaction Supply of rooms for rent grows at a historic pace The market for rooms for rent in Portugal recorded a significant change over the past year. Available supply rose by 79% in the fourth quarter of 2025 compared with the same period of the previous year, creating a better balance between those seeking and those offering rooms. This increase in stock comes amid high housing prices, both for buying and renting, making room rentals an increasingly common alternative. Lower demand pressure reflects a new balance With more rooms for rent on the market, demand pressure fell by around 44% over one year. The decline in the number of interested parties per listing was widespread across most district capitals, with sharper drops in cities such as Lisbon, Porto and Coimbra. This adjustment does not result from a structural fall in demand, but rather from a wider distribution of interest across the available supply. Room rents remain resilient Despite the sharp increase in the supply of rooms for rent, prices have shown resilience. The national median rent rose by 1%, settling at 480 euros per month. Several cities recorded annual increases, while others saw slight declines. Lisbon remains the most expensive market in the country, followed by Funchal and Porto, while inland cities offer more affordable rents. Renting rooms remains a housing solution Rooms for rent continue to be an essential option for students, young professionals, mobile workers and also for families facing budget constraints. Separations, career changes or economic difficulties are leading more people to opt for shared housing. With increased supply, the market is becoming more balanced, although prices remain high in the main urban centres.
Source: Adobe Stock Author: Redaction Over two million rents are off the tax radar Portugal faces a growing rental problem: over 2 million rents are outside the control of the tax authorities. The housing sector is under pressure due to this informal market, which affects both tenants and landlords. Out of approximately 3.7 million rented homes, only a portion of contracts is formally declared. IGF audit reveals scale of informal renting According to a 2024 audit by the Portuguese Inspectorate-General of Finance (IGF), around 60% of tenants do not have rental contracts reported to the tax authorities. Although 1.4 million contracts are officially registered, the reality shows an informal market of more than 2.2 million rentals. This phenomenon contributes to tax evasion and limits tenants’ rights, reflecting an underdeveloped and fragmented rental market, as assessed by the OECD. Impact on tenants and proposed oversight measures The absence of formal contracts prevents tenants from deducting rent on their income tax and from accessing fiscal benefits. Tenant association representatives call for stronger state intervention, including the creation of a regulatory or oversight authority and a contract registration platform. This measure would ensure that only officially registered rentals are considered valid, promoting transparency and protection for all parties involved.
Source: Adobe Stock Author: Redaction New programmes to rent a home in Leiria Renting a home in Leiria may become more accessible with the creation of two new municipal programmes to support the rental market. The local authority has approved the start of the regulations aimed at strengthening the supply of housing with rents compatible with family incomes, particularly for the middle class, which faces difficulties in the open market. These programmes are part of a new municipal strategy to respond to housing shortages and rising prices to rent a home in Leiria, promoting a more balanced market adapted to local reality. Municipality will buy, rent and sublet properties One of the measures provides that Leiria City Council may purchase, rent or, in the medium term, build housing, which will then be sublet directly to residents. The aim is to make homes available to rent in Leiria at prices lower than those practiced on the market, ensuring stability for families facing difficulties in accessing housing. To this end, a regulation will be created defining the rules for capturing properties intended for urban rental for housing purposes, allowing the municipality to directly manage part of the housing supply. Incentives for owners in affordable renting Another key pillar is the Affordable Renting Programme, which encourages owners to make properties available to rent a home in Leiria with rents adjusted to tenants’ incomes. Among the advantages are tax benefits during the term of the contracts and the guarantee of timely rent payments. In addition, owners benefit from fewer guarantee requirements and assurance that the property will be maintained in its original condition, making the municipality an attractive partner in the Leiria rental market. Partnerships and criteria for access to housing The local authority also intends to establish partnerships with public and private entities to increase the supply of homes to rent in Leiria, complementing construction and property acquisition. At the same time, clear and fair criteria will be defined for selecting beneficiary families, ensuring social equity. The regulations are expected to be completed in the coming months, allowing applications from both property owners and households to move forward. Meanwhile, the municipality continues to review the current rent support programme, which already supports hundreds of people in accessing housing.
Source: Adobe Stock Author: Redaction More Houses for Rent, Fewer to Buy in Portugal The Portuguese housing market has undergone changes between 2024 and 2025. The supply of properties for purchase has decreased, while the rental market continues to expand, reflecting new social and economic dynamics. Decline in Properties for Sale The availability of properties for purchase has seen a noticeable reduction, particularly apartments and houses in major urban centres. Porto remains the district with the highest number of apartments for sale, followed by Lisbon, although both have seen a significant drop compared to the previous year. Setúbal and Aveiro also show reduced availability, highlighting the growing difficulty of finding homes to buy in the most sought-after areas. Faro is an exception, with a slight increase linked to tourism and demand for second homes. Growth in the Rental Market Conversely, the rental market has been gaining momentum. Lisbon leads in the number of apartments available for rent, followed by Porto, Setúbal, Braga, and Faro. Demand is driven by professional mobility, employment concentration, and tourist pressure. In the housing segment, availability is also increasing, especially outside the most pressured urban centres, providing more options for those looking to rent homes. Market Impacts and Trends These structural changes show that buyers face greater scarcity and rising prices, while renting offers more varied opportunities. Monitoring market evolution in each district is essential to guide investment decisions, mobility, and residential choices. The trend points to a rental-focused market in high-pressure urban areas, with purchases concentrating in peripheral or less competitive regions.
Source: Adobe Stock Author: Redaction Rents in Lisbon almost unchanged year on year New rental contracts signed in 2025 recorded an annual variation of only 0.2% in Lisbon, while Porto saw a fall of -1.6%, according to the latest Residential Rent Index from Confidencial Imobiliário. In quarterly terms, the last quarter of the year closed with +0.4% in the capital and -0.9% in the Invicta. The stabilisation in Lisbon is the result of a gradual recovery in rents. After the end of 2024 and the beginning of 2025, which were marked by quarterly falls close to 2%, the city entered a phase of greater stability, with positive quarterly variations, in sequence, close to 0.5% from the second quarter onwards. This evolution allowed the year-on-year variation, which was -3.4% in mid-2025, to recover to a slightly positive value by the end of the year. Porto records first annual drop since 2021 In Porto, the 2025 figures reflect a market where rents experienced several consecutive quarterly falls since the end of 2024, with the exception of the third quarter of 2025, when a marginal positive variation of 0.2% was recorded. Although none of these quarterly falls exceeded 1%, their persistence over time ended up pushing the annual variation into negative territory, resulting in the first annual drop since 2021. This evolution shows that the rental market in Porto is slowing down, albeit gradually, after years of more significant increases. The pattern of quarterly declines reveals continued pressure on contracted values. Previous rises give way to a strong slowdown In any case, both markets show a strong slowdown compared to the significant rises recorded in recent years. In Lisbon, contracted rents increased by 26% in 2022, 9% in 2023 and 1% in 2024. In Porto, increases were around 30% in 2022, 12% in 2023 and 2% in 2024. These values show that the intensity of rent growth has been decreasing significantly. The loss of intensity observed in recent years is associated with the economic and political context, marked by uncertainty regarding the update of rents in existing contracts, the inflationary surge and the successive changes and announcements of government measures aimed at the housing sector, factors that mainly constrained supply in the market. Average rents in 2025: €19/m² in Lisbon and €15/m² in Porto In 2025, the average contracted rent in Lisbon reached €19.0/m², while in Porto it stood at €15.0/m², according to SIR-Rent data. These values illustrate the difference between the two markets, with the capital maintaining higher average levels and the Invicta showing a more moderate trend, even with the annual drop recorded.
Source: Adobe Stock Author: Redaction Tax incentives and support for tenants The Government is preparing a set of measures focused on incentives to make the rental market more accessible. For tenants, the main benefits include an increased income tax deduction of €900 per year for moderate rent contracts and enhanced monthly support for families facing financial difficulties. These measures aim to reduce pressure on household income, ensuring more stable access to housing and contributing to the economic stability of the sector. In addition to deductions, rental guarantees ensure regular payments, protecting tenants and fostering a balanced relationship between tenants and landlords. This type of incentive reflects the Government’s priority to create conditions that combine social welfare with the sustainability of the property market. Benefits for landlords and investment in housing For landlords, incentives include reducing income tax on rental income from 25% to 10% for contracts with rents up to €2,300, encouraging the placement of properties in the affordable rental market. VAT on the construction of housing for these contracts is reduced to 6%, promoting new housing development and stimulating economic activity in the construction sector. Incentives also include capital gains exemptions on property sales if the proceeds are reinvested in affordable housing, and the creation of long-term rental investment contracts with additional tax benefits. These measures aim not only to increase housing supply but also to boost private investment and the economy linked to property construction and management. Modernising licensing and partnerships A key element of the incentives is the streamlining of urban planning approvals through electronic platforms, enabling new housing projects to be approved more quickly. Public-private partnerships also gain importance, integrating state-owned vacant properties into affordable rental schemes. These mechanisms help make the rental economy more efficient by reducing bureaucracy and accelerating the placement of properties on the market. Changes also include mandatory registration of new contracts on the Finance Portal and integrating vacant properties over 24 months into the Affordable Rental Scheme. Rent updates follow inflation, maintaining economic predictability for tenants and landlords without relying on extraordinary subsidies. Ongoing support programmes Programs such as Porta 65 Jovem and Porta 65+ remain active, with more flexible rules and accessible criteria. The Extraordinary Rent Support continues monthly payments of up to €200, assisting families with high rent-to-income ratios. These incentives demonstrate the Government’s commitment to sustainable policies that balance social support with economic dynamism, ensuring greater housing accessibility without compromising market stability. In summary, the incentives announced for 2026 combine fiscal measures, direct support, and administrative facilitation, benefiting both tenants and landlords, increasing housing supply, and promoting a more balanced rental economy.
Source: Adobe Stock Author: Redaction New affordable rent scheme in Lisbon starts in January Lisbon City Council approved the opening of the 9th Municipal Subsidy for Affordable Renting, strengthening affordable rent measures in Lisbon. The support comes into effect from January and is intended to respond to the growing difficulties in accessing housing in the municipality. This municipal subsidy aims to support residents in privately rented housing, whose rents represent a high effort rate compared to household income. The initiative is part of the municipal strategy to promote affordable rent in Lisbon and ensure greater housing stability. Who can benefit from the affordable rent subsidy The Municipal Subsidy for Affordable Renting is intended for households with total income above €6,000, living in rented housing in the Lisbon municipality. The support corresponds to a monthly rent subsidy, granted for a maximum period of one year, with the possibility of renewal for an equal period. The measure also covers relocated professionals, such as teachers, police officers and healthcare workers, who perform essential roles in the city and face difficulties accessing housing. In this way, the affordable rent programme in Lisbon seeks to address different housing realities. Housing remains at the centre of the municipal strategy The municipality emphasises that housing remains a strategic priority, especially in the context of rising rental market prices. The new affordable rent scheme in Lisbon continues a programme that has shown a positive impact in easing the difficulties faced by Lisbon families. The subsidy reduces the financial pressure associated with rent payment, contributing to greater housing security and predictability in household budgets. Impact of the affordable rent programme in Lisbon Since the first edition, Lisbon City Council has already granted around 2,500 subsidies under the affordable rent programme, representing a total investment of more than six million euros. These figures highlight the relevance of municipal support in the current housing context. With the opening of a new scheme, Lisbon reinforces its commitment to affordable rent policies, promoting greater equity in access to housing and supporting families facing high rent burdens in the rental market.
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