Portugal's plan to fix the housing crisis: more landlords

The government has spent the past nine months rewriting the rules in landlords' favour. It's Thursday, 27 August. Twenty-six degrees. Air quality: 34 (Good). Here's what you need to know.

🗞️ PORTUGAL'S PLAN TO FIX THE HOUSING CRISIS: MORE LANDLORDS

Portugal's rental market has a structural problem. There are not enough homes available to rent, and many of the people who own properties that could be rented out have chosen not to. The government's response, rolled out in stages since late 2025, has been to change the incentives: lower taxes, fewer restrictions, and stronger legal protections for landlords. The goal is to bring properties back onto the market and encourage new investment in rental housing.

The centrepiece is a tax cut introduced in the 2026 State Budget. Rental income tax for residential contracts dropped from 25% to 10%, provided the monthly rent stays below €2,300. The reduction applies to both new and existing contracts, and runs until the end of 2029. Landlords who set rents at least 20% below their local council's median pay no tax at all. For companies, half the rental income from qualifying contracts is exempt from corporate tax.

In July 2026, the government went further. A proposed overhaul of the NRAU, the National Urban Rental Regime, was approved by the Council of Ministers and is expected to reach parliament this autumn. The key changes tilt the balance further toward landlords. Eviction for non-payment would be possible after two months of non-payment, down from three. Landlords would be able to request up to three months' rent in advance, up from two, and deposits would no longer be capped at two months. The 2% cap on rent increases for new contracts, where a previous tenancy existed, would be scrapped. And landlords would be able to oppose the first automatic renewal of a fixed-term contract, a right currently restricted for the first three years.

The government has also created a Housing Emergency Fund to support tenants who lose their homes due to financial hardship, providing non-repayable assistance for households with housing costs under €2,300 a month.

For Lisbon specifically, the picture is mixed. The city's advertised rents averaged €1,699 a month in the most recent data from idealista, stable year on year, while the national average rose 3.8% to €1,350. Lisbon's short-term rental market has been cooling (revenue per available room fell 3.5% in the first half of the year and foreign guest numbers dropped 3.2%), which may push some properties back to long-term lets. But renting still absorbs 80% of the average household salary in the capital, and only a handful of district capitals in the interior have affordability ratios near the recommended 33%.

Whether these measures will work depends on whether enough landlords respond to the incentives. The tax cut is significant (a landlord earning €1,500 a month in rent saves roughly €2,700 a year compared with the old rate). The NRAU changes, if passed, would reduce the legal risk landlords cite as their main reason for keeping properties empty or selling them. But the underlying problem, that Portugal simply does not have enough homes, remains. The government's own target of 28,000 public homes by end of August and 40,000 by December is a supply-side bet, and the permits pipeline runs an estimated 18 to 24 months behind demand.

Bottom line: Portugal is making a deliberate bet that the way to ease a rental crisis is to make it attractive to be a landlord again. Whether that translates into homes people can actually afford to rent is another question.

⚡ QUICK HITS

Foreign investment in Portugal rebounded to €6.7 billion in the first half of the year. Banco de Portugal figures released today show a sharp recovery after a small net outflow during the same period in 2025. France was the largest source of investment at €7 billion (the total is lower because outflows from Luxembourg and other movements partially offset the inflows). Property investment accounted for €1.7 billion of the total, down from €1.9 billion a year earlier. Income paid to foreign investors reached €5.4 billion, up €400 million on the year. Portuguese investment abroad fell sharply to just €200 million, down from €2.6 billion.

The United Nations has called on Portugal to withdraw or reconsider proposed changes to the country's gender identity laws. UN High Commissioner for Human Rights Volker Türk wrote to the President of the Assembly of the Republic warning that proposals put forward by PSD, Chega and the conservative CDS could conflict with Portugal's international human rights commitments. The main changes would reintroduce a requirement for medical documentation in the legal gender recognition process and remove the ability of 16- and 17-year-olds to request changes to their name and gender marker. A separate CDS proposal would ban hormone treatments and puberty blockers for under-18s. Chega leader André Ventura said on Wednesday that his party would not withdraw its proposal. All three have passed an initial parliamentary vote and are now in committee.

Ryanair has published its busiest Portuguese routes. Lisbon to Porto tops the domestic list, while Lisbon to London is the busiest international connection. Porto to Paris, Faro to London and Lisbon to Milan round out the top five international routes. Ryanair carried more than 13 million passengers through Portuguese airports in the first half of 2026 and has been expanding its route network from Porto and Faro while holding back in Lisbon, citing ANA airport fees as too high. The airline has repeatedly said it would add more Lisbon capacity if the charges came down.

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🍽️ SPOT OF THE DAY

BENGAL TANDOORI (AVENIDA DA LIBERDADE)

Bengal Tandoori is on Rua da Alegria 20, a couple of minutes' walk from Avenida da Liberdade, and it has been serving northern Indian food in Lisbon for long enough that regulars no longer check the menu. Everything is 100% halal and cooked in a traditional charcoal tandoor, which gives the tikkas and kebabs a smokiness that an electric oven cannot replicate.

The menu runs to the Punjabi staples: chicken tikka, lamb seekh kebab, biryani, garlic naan, and a range of curries that you can calibrate by spice level. The tandoori dishes are the reason to come. A meal runs around €18 per person, and portions are generous enough that two people sharing starters and a main each will leave full.

The space seats 68, with a candlelit interior and a more romantic atmosphere than you might expect from an Indian restaurant. It is open every day from midday to midnight, for both lunch and dinner.

→ Find them here ←

Insider tip: ask for the chicken malai tikka. It is not the most obvious thing on the menu but the cream marinade is what sets it apart from the standard tikka, and the charcoal does the rest.

📅 WHAT'S ON

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