On April 7, 2026, the Portuguese parliament approved key legislative measures aimed at increasing housing supply. The new package focuses on reducing construction costs, simplifying certain procedures, and bringing more residential units to the market.

📉 The main measure is a reduced VAT rate of 6% instead of the standard 23% for specific projects. The benefit applies to the construction or renovation of residential properties if the property is intended:

— for sale as the buyer’s primary and permanent residence;
— for rental at moderate price levels.

A price cap of €660,982 is set for sales, while rental is limited to €2,300 per month. This means the measures are primarily targeted at the affordable and mid-market housing segment.

📅 The measure applies to urban development projects initiated between September 25, 2025, and December 31, 2029. The reduced VAT regime can be applied until December 31, 2032.

🏗 In addition to tax changes, the package also addresses supply-side mechanisms. The goal is to reduce timelines and simplify procedures, while shifting part of the compliance responsibility to developers and technical specialists.

📊 This leads to several important implications for the local real estate market:

— housing construction for primary residence and moderately priced rental may become more economically attractive due to the VAT reduction from 23% to 6%;
— projects within the defined price limits receive direct tax support;
— simplified approvals and procedures may reduce administrative delays that currently slow down new supply.

🏘 Portugal is now supporting not only residential development for sale, but also projects focused on owner-occupied housing and long-term rental at moderate price levels.

🏡 Given that new projects are expected to reach the market only within the next 1–3 years, the current period remains a window of opportunity for buyers amid limited supply. You can explore available property options in Portugal on our website.