Portugal delays tax cuts on moderate rents to 10% and squeezes nomad housing supply

Portugal’s rental reform stays stuck in parliament

Portugal’s housing package, approved by the Council of Ministers in September 2025, still hasn’t cleared final parliamentary approval. The plan cuts tax on moderate rents to 10% from 25%, exempts some landlords from AIMI and trims capital gains tax if they reinvest in rentals.

It was meant to help unlock about 45,000 affordable homes. Instead, the delay has left landlords guessing and some are pulling long-term rentals off the market while they wait.

Why expats and nomads are feeling it

That uncertainty matters for expats, digital nomads and long-term travelers who already face tight supply in Lisbon, Porto and other high-demand areas. Some landlords are shifting toward short-term Alojamento Local rentals, where earnings can be more predictable.

The result is fewer long-term options and more pressure on rents. House prices are still expected to rise 15% in 2026 after an 18% jump in 2025, while rental markets remain tense even where recent price moves have slowed.

What renters and landlords should watch

The reform’s tax incentives, tenant deductions and VAT cuts are meant to kick in from 2026 if lawmakers finish the process. The package keeps the 2% cap off new leases, ties existing ones to inflation and speeds eviction steps for nonpayment.

Landlords offering “moderate” rents up to €2,300 a month qualify for the lower tax rate. Tenants can claim deductions through income tax filings and qualifying construction or rental projects may get a 6% VAT rate through 2029.

Read our full Portugal guide for the complete picture.