Portugal Sets 2026 Rent Increase Coefficient at 2.24 Percent
The Portuguese government has announced the definitive coefficient for the annual update of rental contracts, confirming that landlords will be permitted to increase rents by a maximum of 2.24% in 2026. This announcement of a key price change was made following the release of final inflation figures for August by the National Institute of Statistics (INE). The legally mandated cap on rent hikes is a critical piece of information for property owners and tenants across the country, providing clarity on the allowable adjustments for the upcoming year. The official update coefficient, which will be published in the Diário da República, is set at 1.0224. This figure is slightly lower than the preliminary estimate of 2.25% that had been projected earlier.
The detailed breakdown of the price movement shows that for every €100 of rent, an increase of €2.24 is permitted. For a typical rental contract with a monthly payment of €1,000, this translates to a maximum increase of €22.40, resulting in a new monthly rent of €1,022.40. This cap applies to most urban and rural lease agreements that have been active for at least one year, as stipulated by the New Urban Lease Regime (NRAU). It is at the landlord's discretion whether to apply this increase, and they must provide the tenant with a minimum of 30 days' advance notice. Contracts that contain their own specific clauses for rent actualization will follow the terms agreed upon by the parties involved.
The primary factor contributing to this price change is the national inflation rate. The rent update mechanism is directly tied to the 12-month average of the Consumer Price Index, excluding the housing category, as calculated at the end of August of the preceding year. This method is used to prevent a feedback loop where rising rents would themselves contribute to higher inflation and, consequently, even higher rent increases. This year's 2.24% increase follows a 2.16% increase that was authorized for 2025, marking a continued upward trend in rental costs. Real estate agency reports and market observers will now incorporate this official figure into their financial forecasts and advisory services for clients.
Buyer and seller behavior is indirectly influenced by these rental market dynamics. A predictable and regulated increase in rental income can make residential property a more attractive asset for buy-to-let investors. While the 2.24% cap governs existing contracts, the broader market for new rentals continues to show strong price appreciation. The INE reported that the average of all housing rents, including new leases, rose by 5.1% year-on-year in August. This demonstrates robust demand, particularly in high-growth areas. According to the INE's geographic breakdown, every region in Portugal saw positive rent growth, with Madeira recording the most significant increase at 7.0%.
The mortgage market response to these trends is also a key consideration. Stable rental income growth can support property valuations and a borrower's ability to service mortgage debt. The expected price trajectory for rents, based on current indicators of high demand and controlled annual increases, suggests that rental property will remain a stable and performing asset class. This regulated environment, coupled with strong underlying market demand, provides a degree of security for investors navigating the Portuguese real estate market. Stay informed on Lisbon property market developments at realestate-lisbon.com.
