Rental Prices in Portugal to Rise by 2.25% in 2026
The National Statistics Institute (INE) announced this Friday that the coefficient for updating rental contracts for 2026 has been set at 2.25%. This figure, derived from the annual average rate of change of the Consumer Price Index (CPI) excluding housing for the 12 months ending in August, allows landlords to increase rents by this percentage starting from the new year. The official confirmation of the underlying inflation data is scheduled for release on September 10.
This update represents a slight increase compared to the 2.16% cap in effect for 2025 but signals a continued stabilization following the dramatic 6.94% coefficient recorded for 2023, which led the previous Socialist government under António Costa to implement a temporary 2% cap to mitigate the impact on tenants. The current government has allowed the formula to operate without such direct intervention, reflecting a policy shift towards market-based mechanisms.
According to the INE's announcement, the calculation is based on the established legal framework governing urban and rural leases. The 2.25% increase means that a tenant currently paying a monthly rent of €800 could face an increase of €18, bringing the new monthly payment to €818. For a higher-end rental of €1,500 per month, the increase would amount to €33.75, resulting in a new rent of €1,533.75.
This adjustment occurs in a market that has seen significant price appreciation. Recent data has shown that rental prices in Portugal have increased by over 70% in the last five years, with a 10% rise in the last year alone. The median value of new rental contracts has consistently outpaced wage growth, a trend that has fueled public debate and policy discussions around housing affordability. The INE's flash estimate for the year-on-year CPI variation in August was 2.8%, indicating that broader inflationary pressures persist in the economy.
Housing market specialists note that while the 2.25% figure is moderate, it contributes to the cumulative financial pressure on households. "While this is far from the shock of 2023, any increase in a high-cost market like Lisbon is felt by tenants," stated a researcher from a national housing observatory. "It reflects a normalization of inflation, but the underlying issue of supply failing to meet demand continues to drive the market's high price point."
The government's decision not to intervene with a cap this year has been interpreted as a move to restore confidence among property owners and investors. Real estate associations have previously argued that artificial caps disincentivize investment in the rental market, exacerbating supply shortages. They contend that allowing the legally defined formula to function ensures a predictable and fair mechanism for both landlords and tenants, aligning rental income with broader economic trends.
The Ministry of Housing has reiterated its commitment to addressing the housing crisis through supply-side measures, such as simplifying licensing for new construction and offering incentives for affordable rental projects. Officials maintain that these structural reforms are more effective in the long term than market interventions like rent caps. The impact of the 2.25% increase will be closely monitored as it rolls out, with particular attention on its effects in high-demand metropolitan areas like Lisbon and Porto, where the rental affordability crisis is most acute.
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