Portugal’s 2026 Rent Hike Capped at 2.25 Percent

Many foreign residents hoped the next annual rent adjustment would be gentler, and in a sense it will be. The provisional ceiling unveiled by Portugal’s national statistics agency points to a maximum 2.25 % rent hike for 2026, slightly higher than this year’s 2.16 % but far below the 2023 inflation peak that once threatened 7 %. The number may look small, yet for newcomers and long-term tenants alike it still matters: it is the figure landlords can legally invoke when they update contracts next January.

A modest uptick—yet one more line on the budget

After half a decade in which average Portuguese rents climbed more than 70 %, the new 2.25 % limit feels tame. For a family in Cascais paying €1 400 per month, the authorised adjustment would be about €31; a single professional in Porto on a €750 lease would face just under €17 extra. Although the increase is incremental, it will land atop already elevated housing costs that many expatriates regard as Portugal’s biggest drawback. Property economists say the cap “keeps the temperature from boiling over” but does not reverse the structural squeeze created by short supply.

How statisticians arrived at 2.25 %

The coefficient is computed by the Instituto Nacional de Estatística (INE) using the average variation of the Consumer Price Index without housing over the 12 months that end in August. Excluding accommodation costs avoids a feedback loop in which rising rents would inflate the very index that sets next year’s ceiling. A flash estimate released on 29 August pegged that average at 2.25 %; definitive numbers will be published on 10 September and enshrined in the Diário da República by 30 October. Unless a political decision intervenes, the figure cannot later be revised.

When and how your landlord may apply it

Under Portugal’s Novo Regime do Arrendamento Urbano (Law 6/2006), annual updates are optional, never automatic. A landlord who wishes to raise the rent must deliver written notice at least 30 days before the contract’s anniversary date. The notice must cite the legal coefficient and show the old and new amounts. Only then, and not before January 2026, can the higher payment take effect. Foreign tenants often assume indexation is universal; in practice, many small landlords skip increases to retain reliable occupants.

What the math looks like in real life

Lisbon remains the most expensive market, with fresh leases averaging €21.50 per square metre last June. If you secured a 65 m² flat in 2024 for €1 400, the statutory formula—current rent × 1.0225—lifts the bill to roughly €1 431. Porto’s 17.20 €/m² median translates a similar apartment into €1 120 today and €1 145 in 2026. Inland cities still post sub-€600 rents, so the euro increase there can be single-digit. The arithmetic is simple but the impact on disposable income varies sharply by region and household composition.

Safety nets that remain in place

Because the government dropped the extraordinary “rent freeze” after 2023, it has kept alternative relief channels open. The Apoio Extraordinário à Renda continues to refund up to €200 per month to households whose rent‐to-income ratio exceeds 35 %. Younger residents can still apply for the Porta 65 Jovem subsidy, and middle-income families may benefit from the revamped Programa de Apoio ao Arrendamento, which encourages landlords to charge below-market rates in exchange for tax incentives. None of these schemes require Portuguese nationality, only legal residence and a tax number, so expats can—and should—check eligibility.

A market that is cooling but not cheapening

Analysts at Confidencial Imobiliário detect a gradual slowdown: Lisbon rents fell 3.4 % year-on-year in the second quarter of 2025, while Porto logged its third consecutive quarterly dip. Even so, both cities sit far above pre-pandemic levels and the Algarve keeps climbing thanks to tourism demand. The overall takeaway for foreign tenants is that Portugal is stabilising, not reversing. A 2.25 % ceiling therefore buys time rather than delivers savings.

What could still shift before January

Two variables bear watching. First, the final INE reading in September could nudge the coefficient by a few hundredths of a point, though large swings are unlikely. Second, political pressure to repeat 2023’s emergency cap could resurface if inflation flares this autumn. For now, officials signal continuity: no new clamp-down, but also no withdrawal of rental supports. Expats negotiating leases this fall would be wise to ask prospective landlords whether they intend to apply next year’s indexation—and, if so, to lock the commitment in writing.

The bottom line: Portugal’s rent rules remain predictable by European standards, yet every decimal counts. For anyone planning a move or renewing a contract in 2026, factor the 2.25 % adjustment into your budget, confirm your landlord’s intentions early, and explore the subsidies that can cushion the blow.