Updated: April 29, 2025

 

With Portugal’s legislative elections fast approaching on 18 May 2025, housing has emerged as one of the defining issues of the campaign. These elections could have a huge impact on the country’s real estate market for years to come, influencing everything from investment opportunities to property prices.

While parties differ in how they propose to solve housing issues in Portugal, there is a major consensus amongst political parties that more needs to be done to increase housing supply in the country and that action is urgently needed.

Housing Takes Center Stage in Elections

Over the past few years, rising property prices, a shortage of affordable rental options, and a growing demand for urban housing has put pressure on Portugal’s property market. This has led to discussions and legislation – such as the More Housing (Mais Habitação) Bill of 2023 – to attempt to solve these issues.

The issue is primarily one of supply and demand, whereby access to affordable housing is proving to be difficult. This has led to legislation under the current government, such as the elimination of IMT (Property Purchase Tax) for young people under 35 years old, making it easier for them to jump on the property ladder in Portugal.

However, Portugal’s political parties agree that more comprehensive measures are needed. This election could mark a turning point for the future of the real estate sector in Portugal.

Party Positions on Housing Reform

This election marks a pivotal moment in how the future of housing could look, depending on who is successful in the election. The implications will have effects on both locals and foreign investors seeking to capitalize on the country’s booming tourism sector and investor-friendly incentives.

Here’s where the main parties stand:

Democratic Alliance (Aliança Democrática – AD)

Currently leading a minority government, AD is promising to boost the housing supply and provide a quick route to more affordable housing. Proposals are focused on making land-use restrictions more flexible, quickly injecting underused public properties and land into the market, offering tax cuts for construction and rehabilitation, and expanding public-private partnerships, alongside establishing a financial program for renovating vacant properties for affordable rentals.

Socialist Party (Partido Socialista -PS)

PS has plans to boost public housing and regulate short term rentals, such as Alojamento Local (AL) licenses. Their strategy includes shifting more rental properties into the long-term rental market while introducing new measures to ensure housing costs remain proportionate to incomes, improving support for housing access.

Liberal Initiative (Iniciativa Liberal – IL)

The IL takes a market-driven approach, advocating for sweeping tax cuts – reducing rental income from 25 to 15 percent and cutting VAT on construction from 23 percent to 6 percent. The IL has also proposed implementing automatic licensing for properties in pre-approved areas, to quickly put vacant properties on the market, and to revoke the State’s right to interfere in private property sales.

Left Bloc (Bloco de Esquerda – BE)

BE has focused its housing proposals on making rents affordable in Portugal and relative to incomes. This includes rent caps based on property location and characteristics, a halt to new hotel constructions, and tighter restrictions on short term rentals.

CDU (PCP-PEV)

The CDU proposes a massive expansion of public and cost-controlled housing, rent caps, and stronger tenant protections. They are also campaigning for tighter regulations on short term rentals, limiting real estate fund acquisitions, and ending liberal housing policies by eliminating tax privileges for non-habitual residents and taxing speculative real estate income.

People-Animals- Nature (Pessoas Animais-Natureza  – PAN)

PAN adds an environmental and social focus, providing tax incentives for affordable rentals and sustainable upgrades to housing, alongside protections for tenants.

Note: Proposals from Chega (CH) and Livre (L) are not included, as they were not available at the time of publication. Chega currently sits in third position in the polls at 17.8 percent. 

Current Poll Standings

According to recent projections from PolitPro, the center-right AD is currently topping the polls. AD leads with 30.3 percent of the vote, in front of PS, which has 28.5 percent. They are currently leading the other parties by more than 10 percent, with CH next on 17.8 percent.

Other parties’ current standings:

  • IL: 6.1 percent
  • L: 3.7 percent
  • CDU: 3.4 percent
  • BE: 2.8 percent
  • PAN: 2.2 percent
  • Others: 5.2 percent

Looking Ahead

Portugal’s 2025 legislative elections could signal a new chapter for real estate and urban development.

For property investors and foreign homeowners, the outcome of the election could significantly change everything from rental regulations to tax incentives, with some party policies focused on tightening regulations on short term rentals.

The incoming government’s choices will shape opportunities – and challenges – in the housing sector for years to come.

If you’re considering investing in Portugal, now may be the ideal time to act before any policy changes take effect. Staying ahead of the evolving market will be crucial to making informed real estate decisions in the coming months.