Portugal addresses housing crisis with new approved measures
On 27 March 2026, the Portuguese Government, led by Luís Montenegro, approved a new set of reforms to address the housing crisis.
The measures focus on three main areas: strong tax incentives, simpler construction rules, and releasing real estate tied up in undivided inheritances.
Increase the number of available homes
The Prime Minister said the main goal is to increase the number of homes available, encourage affordable rentals, and make it easier for people to buy a permanent home.
Encouraging investment
The reforms bring important tax changes to encourage investment. Some of the main steps are lowering taxes for landlords who offer moderate rents and applying a lower VAT rate to construction work for homes people live in or rent at affordable prices.
Capital gains tax exemption
The government also approved a capital gains tax exemption on property sales, provided the proceeds are reinvested in affordable rental housing. These actions are meant to help balance supply and demand over time and help keep prices in check.
New rules for urban development
To bring new homes to the market faster, the government is also updating the rules for urban development and construction. This fast-track system is meant to make getting building permits easier, more predictable, and more efficient, thereby lowering costs and helping keep home prices down.
Inheritance measures
There is also a new process to solve problems with undivided properties.
Now, if an inheritance is stuck for 2 years, any heir can start selling the property, even if not everyone agrees. This aims to put empty homes back on the market in both cities and rural areas, while still protecting the rights of all heirs and making sure everyone is involved in the sale.
On the one hand, through tax incentives and capital gains tax exemptions, the government aims to direct more capital into the affordable housing and rental markets. On the other hand, simplifying approval processes and unlocking properties tied up in inheritance disputes can help increase housing supply in the short term. This multi-dimensional policy approach is expected to gradually improve the market structure over the coming years.
The core direction of these policies remains focused on encouraging long-term holding and the development of the rental market. As supply and demand conditions progressively rebalance, urban assets with stable rental demand, as well as property types aligned with policy priorities, are likely to demonstrate stronger resilience and sustained value in the future.
Reference link: https://www.theportugalnews.com/news/2026-03-31/portugal-addresses-housing-crisis-with-new-approved-measures/998771
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