Portugal Sets 2026 Rent Increase Cap at 2.24 Percent
The maximum permissible increase for rental contracts in Portugal during 2026 has been officially set at 2.24%, according to the final inflation data released by the Instituto Nacional de Estatística (INE). This figure corresponds to the average annual rate of change in the consumer price index, excluding housing, recorded over the 12 months leading up to August 2025. The resulting update coefficient of 1.0224 will be published in the Diário da República, formalizing the legal ceiling for rent adjustments for the upcoming year.
This announcement provides clarity for both landlords and tenants regarding contracts governed by the Novo Regime do Arrendamento Urbano (NRAU). In practical terms, a monthly rent of €1,000 can be increased by a maximum of €22.40. Landlords are required to provide tenants with a minimum of 30 days' written notice before the contract anniversary date if they intend to apply the increase. The established coefficient represents the maximum legal limit; however, specific contracts may contain different update clauses as agreed upon by both parties, which would take precedence.
The 2.24% increase for 2026 marks a slight acceleration from the 2.16% update applied in 2025, reflecting a continued, albeit moderate, inflationary environment. The final figure confirmed by INE was marginally lower than the preliminary estimate of 2.25% that had been projected earlier. The calculation methodology, which excludes the housing component from the inflation metric, is designed to prevent a feedback loop where rent increases directly fuel the index used to calculate them.
While the update coefficient is a national standard, the INE's report also detailed broader trends in the rental market, which continue to show strong growth. The average value of housing rents increased by 5.1% year-on-year in August, consistent with the previous month's performance. The data revealed notable regional differences, with all areas of the country showing positive year-on-year growth. The autonomous region of Madeira recorded the most significant increase, with average rents climbing by 7.0%.
On a monthly basis, the average rent per square meter across Portugal rose by 0.4% in August, an acceleration from the 0.3% increase seen in July. Once again, Madeira led the regional growth with a 0.6% monthly increase. The INE report indicated that no region registered a negative monthly variation in average housing rents, signaling widespread and sustained upward pressure on the market. This data encompasses the entire rental market, including both new and existing lease agreements.
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