Public investment, tax incentives and property mobilisation to expand affordable housing
Portugal’s proposed 2027 State Budget (OE2027) identifies increasing housing supply as a public policy priority, combining investment in public housing, tax incentives for construction and rental housing, and measures to mobilise property assets. The objective is to address the shortage of housing and improve access to accommodation through the involvement of the public, private and cooperative sectors.
The proposal allocates €2.003 billion to expanding affordable housing supply and strengthening the public housing stock. Of this amount, €1.071 billion is earmarked for public housing construction and rehabilitation programmes, while €917 million is associated with rental support, including schemes such as Porta 65 and incentives for affordable renting. Funding is also planned for 45,000 homes not covered by the Recovery and Resilience Plan (RRP).
On the tax front, key measures include reducing VAT on construction to 6%, subject to the applicable conditions for qualifying housing projects, and maintaining tax incentives for moderately priced rental housing. The proposal also provides for the continuation of IMT property transfer tax and Stamp Duty exemptions for eligible buyers aged 35 or under purchasing their first permanent home, alongside further support for young renters.
Another priority is to facilitate municipal involvement in affordable housing construction and rehabilitation, mobilise public property through partnerships and asset transfers, and simplify urban planning approval procedures. These measures are intended to reduce administrative barriers and accelerate the delivery of new homes to the market.
The main takeaway is that OE2027 proposes a response to Portugal’s housing crisis built around public investment, tax incentives and private-sector participation. Its actual impact will depend on programme delivery, project implementation and the ability to translate the proposed measures into a tangible increase in housing supply and more affordable homes.
Published in Magazine Imobiliário on 26 October 2026
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