Portugal's 2026 Rent Update Coefficient Set at 2.25% Based on August Inflation Data
The coefficient for updating rental contracts in Portugal for the year 2026 will be 2.25%, according to data released this Friday by the National Statistics Institute (INE). This figure is based on the average annual variation of the Consumer Price Index (CPI) excluding housing over the last 12 months, which serves as the legal basis for landlords to adjust rent prices. Starting from January 1, 2026, property owners will be permitted to increase monthly rents by this percentage on expiring contracts, representing a slight acceleration from the 2.16% update allowed in the current year.
The INE's flash estimate for August's year-over-year inflation stood at 2.8%, with the final, official data scheduled for publication on September 10. The 2.25% coefficient means that a tenant currently paying a monthly rent of €1,000 could face an increase of €22.50, bringing the new rent to €1,022.50. Similarly, a contract with a rent of €800 would see a potential increase of €18 per month. This adjustment provides a clear benchmark for the rental market as it heads into the new year, impacting financial planning for both tenants and property owners across the country.
This figure continues a trend of moderation compared to the recent past. The market is still moving away from the nearly 7% coefficient seen in 2023, a figure so high that it compelled the Socialist government at the time to implement a temporary cap to mitigate the impact on households. The current government, led by Luís Montenegro, has allowed the legally defined formula to operate without intervention, signaling a return to established market mechanisms. The stabilization of the coefficient below 3% is seen by economists as a sign that the inflationary pressures that previously drove steep rent hikes are beginning to subside.
The context for this update is a rental market that has experienced significant pressure. In the last year alone, rental prices in Portugal increased by 10%, with the median value of new contracts rising faster than wages, according to data from the first quarter of 2025. Over a five-year period, the cumulative increase in rents has exceeded 70%, highlighting a persistent affordability crisis in major urban centers like Lisbon and Porto. Real estate professionals will be watching closely to see how this modest increase influences market dynamics and tenant-landlord negotiations in the coming months.
The use of the CPI excluding housing is a standard practice designed to prevent a feedback loop where rising housing costs directly contribute to further rent increases. By relying on a broader measure of inflation, the mechanism aims to reflect general economic conditions more accurately. The government's adherence to this formula provides a degree of predictability for the market, allowing stakeholders to anticipate changes based on publicly available economic data from the INE. This transparency is a key component of the legal framework governing rental agreements in Portugal.
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