What is the Mais Habitação update about

It summarises proposed changes discussed in December 2025 that could affect rental owners, including potential tax incentives and a shift in how policy treats short term rentals and alternative rental models.

What is the proposed IRS rate change for rental income

The proposal would apply a flat 10 percent IRS rate to rental income from leases with rents up to 2,300 euros per month, compared with a 25 percent rate referenced as the current level.

Which contracts could qualify for the proposed 10 percent IRS rate

The proposal indicates it may apply to leases including short term rental contracts and longer leases, for new and existing contracts that meet the defined criteria, as long as the rent is up to 2,300 euros per month and the annual criteria are met.

Has the 10 percent IRS proposal been approved

No. The text states the change still needs parliamentary approval, so it is not confirmed until it is enacted.

How could this affect short term rental owners

If approved, taxing eligible rental income at 10 percent instead of 25 percent could improve net profitability for properties whose rents are at or below 2,300 euros per month, and reduce the relative tax pressure that can influence strategy choices.

How could this affect long term and mid term landlords

Owners considering mid term letting, such as students, corporate stays, or relocations, could benefit from the same proposed 10 percent rate on eligible moderate rents, which could make these options more financially attractive.

Why is the government proposing this IRS reduction

The stated aims are to stimulate rental supply, make rental income more attractive to investors, and support housing affordability by encouraging rents to stay at moderate levels.

What is the European Affordable Housing Plan mentioned in the update

It refers to a plan presented by the European Commission in December 2025 intended to support access to affordable, sustainable, quality housing across EU countries, including measures that can affect rental markets in areas under pressure, with references to planning and licencing simplification and investment support.

What should property owners do next

Owners can monitor whether the proposals pass, review whether their pricing fits the moderate rent threshold, compare short term, mid term, and long term strategies under the potential new tax conditions, and seek professional guidance for licensing and compliance decisions.

Mais Habitação Regulations

December 19, 2025

Portugal proposes reversal of short-term rental restrictions – “Mais Habitação” – update

Revisiting the Mais Habitação: proposed reversals for short-term rental restrictions and its impact for property owners

Update:In December 2025, the Portuguese government proposed a series of fiscal reforms that will also impact short-term rental owners and investors across Portugal.

One notable proposal is a reduction of IRS (personal income tax) on rental income for contracts with moderate rents. Under the new proposal, rental income from leases, including short-term rental contracts with rents up to €2,300 per month, may be taxed at a flat 10% IRS rate, down from the current 25%. This applies to new and existing contracts that meet the defined criteria, regardless of contract duration.

Meanwhile, housing policy at the European level is evolving. In December 2025, the European Commission presented the first European Affordable Housing Plan, a coordinated initiative to promote access to affordable, sustainable, and quality housing across EU countries, including support for accessible rental markets. The plan aims to unlock both public and private investment in housing, simplify planning and licencing procedures, and introduce targeted measures for rental markets in areas under stress (including short-term rental zones).

If you’re curious to find out how much you could be earning with your property either as a short-term rental or as an alternative rental, you can use our calculator and find out now.

More on the tax changes affecting rental income

IRS at 10% on moderate rents

As part of the latest housing and tax reform discussions in Portugal, the government is proposing to reduce the IRS rate on rental income to 10% for rents up to €2,300 per month, regardless of contract type, including short-term and longer leases, as long as annual criteria are met. This change still needs parliamentary approval, but if enacted, it could significantly improve net returns for many property owners.

This proposed IRS reduction is intended to:

Stimulate rental supply in the housing market
Make rental income more attractive for investors
Improve housing affordability by incentivising property owners to offer rents at “moderate” levels rather than withdrawing units from the market

The reduction forms part of a broader fiscal package designed to encourage supply and ease rental costs across Portugal’s urban centres.

Context within Mais Habitação reform

Originally, the Mais Habitação package introduced measures aimed at tightening control over short-term rental licences and discouraging the conversion of housing stock into short stays. With the new tax proposals, the landscape could shift, where tax incentives help to balance rental markets and support accessible housing strategies.

What this means for property owners in 2025–2026

Short-term rental owners

If the IRS reduction is passed:

Short-term rental income taxed at 10% rather than 25% could increase profitability, especially for properties with rents under €2,300 per month.
This may reduce the financial burden that previously made long-term rentals more attractive than short staying accommodation.

Long-term and mid-term landlords

Property owners considering alternative rental strategies, such as mid-term letting (e.g., letting to students, corporates or relocations), could benefit from the proposed 10% tax rate on moderate rents, making these options more competitive and financially attractive.

Although Portugal retains national authority over housing policy, the new European Affordable Housing Plan demonstrates a continental trend toward supporting housing access and rental market stability, potentially influencing national priorities on planning, investment, and regulation.

What lies ahead

As these proposals are updated or approved, we will update this post and our complete guide on Mais Habitação for short-term rentals.

In the meantime, whether you are looking to explore profitable alternative rental strategies such as mid-term rentals or flexible renting, or if you need assistance in navigating the upcoming changes to prepare for a new AL licence, our team is ready to support you.

Previous article Next article