The housing crisis has been one of the central themes on the political agenda, leading the Portuguese Government to introduce a new concept into the rental market: Moderate Rent in Portugal (Renda Moderada em Portugal). This initiative replaces the former "Affordable Rent" scheme and primarily aims to mobilize more properties for the rental market and support the middle class through tax benefits. But what exactly is Moderate Rent, how does it fit into the real estate landscape, and who can benefit?
The New Moderate Rent Concept
The Government has established that Moderate Rent in Portugal corresponds to a monthly rent range situated between €400 and €2,300.
These values have no municipal limits, a change that, according to the Minister of Housing, aims to ensure greater transparency and national scope.
The definition of this maximum ceiling of €2,300 has generated debate, especially because the executive associates it with middle-class families with an aggregate monthly income of around €5,750, assuming a maximum effort rate of 40% for housing. The Government's objective, they state, is to cover the majority of families in Portugal and a large part of the areas under the most significant housing pressure, such as the Metropolitan Areas of Lisbon and Porto.
Tax Benefits for Landlords and Tenants
The main way to boost the rental market with Moderate Rent in Portugal is through a set of tax incentives, both for those who place properties on the market (landlords) and for those who rent them (tenants).
Advantages for Landlords
For property owners who choose to place their properties on the rental market with values up to the €2,300 limit, the benefits are significant:
The IRS rate on rental income will be reduced from 25% to 10% for contracts that fall under Moderate Rent scheme.
Properties rented within the moderate rent range are exempt from the IMI surcharge (a tax on high-value properties).
Application of the 6% VAT rate for the construction and rehabilitation of properties intended for rent up to €2,300, with minimum contract lengths of three years.
Advantages for Tenants
Tenants who sign rental contracts at moderate prices will also see a reinforcement of their support:
- Increased IRS Deduction: The maximum limit for IRS deduction on housing rental charges, currently €700, will be progressively increased:
- €900 in 2026 (referring to 2025 income).
- €1,000 in 2027 (referring to 2026 income).
This increase covers first-home rental contracts that fit the Moderate Rent in Portugal concept, providing direct tax relief to families.
The Impact on the Real Estate Market
The introduction of Moderate Rent in Portugal reflects a shift in housing policy, centering it on the urban middle class. By setting a ceiling of €2,300, the Government seeks to attract a significant part of the rental market, especially in high-pressure areas, to a tax incentive regime.
The effectiveness of this measure will depend on landlord adherence, as they will have to weigh the benefit of the reduced IRS rate against the potential to rent the property for a value higher than the €2,300 ceiling, outside the Moderate Rent in Portugal regime. For constructors and developers, the VAT reduction to 6% may accelerate the placement of new properties on the market intended for this price range.
In short, the new initiative aims to balance supply and demand, encouraging rentals at prices that, although high for the national average, are considered moderate in the metropolitan areas of Lisbon and Porto, thus offering a lifeline to the middle class.