PORTUGAL Law and Practice Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves, Miguel Paquete and Mafalda Oliveira Cordeiro, CS’Associados
1. General 1.1 Main Sources of Law
1.3 Proposals for Reform The President of the Republic recently enacted two housing-related packages approved by the Assembly of the Republic authorising the Portuguese Govern - ment to legislate on tax matters and urban planning licensing to increase the supply of residential proper - ties, as follows. • The first package introduces tax relief measures, offering fiscal incentives for the construction, renovation, sale and leasing of residential proper - ties. These include a reduced VAT rate for works on properties intended for owner occupation or residential leasing, deductions for stamp duty and exemption from Municipal Property Transfer Tax (IMT) on first acquisitions for owner occupation. Incentives for residential leases include a reduced Property Income Tax (PIT) rate for landlords charg - ing moderate rents, as well as the creation of the Investment Rental Contracts’ scheme, providing tax exemptions for residential leased properties, and of the Simplified Affordable Rental scheme, offering benefits for leases and subleases within set maximum rent thresholds and minimum con - tractual terms. These incentives are subject to maximum limits for so-called moderate monthly rents (EUR2,300) and moderate sale prices (EUR660,982). • The second package, concerning urban plan - ning licensing, approves the amendment of the Legal Framework for Urban Development and Construction (RJUE), approved by Decree-Law 555/99 of 16 December, and the amendment of the Legal Framework for Urban Regeneration (RJRU), approved by Decree-Law 307/2009 of 23 October. Key measures on the RJUE amendment include: (i) reducing the binding verification period for the legal and regulatory compliance of projects sub - mitted with prior communication ( comunicação prévia ) to at least one year; (ii) requiring reference to urban planning permits in transactions involving the transfer of ownership of urban properties; and (iii) allowing partial provisional acceptance even when urbanisation works have not been licensed in phases. The RJRU amendment clarifies that compensation is payable to the Municipality where a property owner fails to provide land for social, cost-controlled, or affordable residential leases.
The Portuguese Civil Code (CC) is the main source of real estate law, stipulating the types and features of property rights, as well as the rights, charges and encumbrances affecting ownership. The CC also regulates the main aspects of leases, as supplemented by the New Urban Lease Regime (NRAU) and the New Rural Lease Regime. Also set forth in the CC are the provisions that govern co- ownership of real estate assets, as well as the con - dominium regime and the fundamental aspects of construction agreements. Other important sources include several pieces of leg - islation on housing, protection of cultural heritage, as well as the construction and licensing of properties. 1.2 Main Market Trends and Deals 2025 was another solid year for Portuguese commer - cial real estate, with an 18% increase in transaction volumes, totalling EUR2.7 billion in investment. As in 2024, the retail sector was the front-runner (representing about 31% of investment), followed by offices (23%) and hotels (19%). Early estimates for 2026 were quite positive, with an expected decline in interest rates and stabilising infla - tion pointing to a year of continued growth, albeit at a more moderate pace than in previous years, and with high construction costs still expected to have a negative impact. However, the first quarter of 2026 tempered this initial optimism, with geopolitical, economic and commer - cial tensions – which appear to be the new normal – amplified by the war in the Middle East. Surges in energy prices are expected to have rippling effects on world economies and investment appetite, driving interest rates and inflation upwards and exacerbating uncertainty. ESG continues to be a key topic, being a requirement for investors and banks in selecting more efficient assets.
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