Buying a house to rent in Portugal yields 6.9% - and has lower risk

Investing in housing could become even more attractive. The Government has announced a set of tax incentives for those who rent out homes for up to 2,300 euros per month (with contracts of at least three years), including a reduction in the personal income tax (IRS) rate from 25% to 10%. In this context, buying property to rent out in Portugal could become even more appealing for those looking to invest in the rental market. According to data from idealista, this type of investment generated a gross return of 6.9% in the third quarter of 2025, presenting fewer risks than a year ago.

Investing in residential property to place it on the rental market achieved a gross yield of 6.9% in the summer of 2025, a decrease of 0.3 percentage points (p.p.) compared to the same period in 2024 (7.2%) and 0.5 p.p. compared to the third quarter of 2023 (7.4%), according to data from idealista. This means that the risk associated with this business is currently lower than in the past two years. Even so, the return on investment in housing remains 0.4 p.p. higher than that recorded in 2020 (6.5%).

This gross yield represents the return on investment in housing before taxes, fees, and other costs are deducted. It’s worth recalling that house sale prices have been rising much faster than rents (7.6% and 4.1%, respectively, in September 2025), according to the idealista price index. On the other hand, it’s important to note that the lower the profitability, the lower the risk of the business (and vice versa).

Buying a home to rent out: how much does it yield in Portugal?
Gross housing yield (%)

2
4
6%
6.5%
5.7%
5.9%
7.4%
7.2%
6.9%
Q3 2020
Q3 2021
Q3 2022
Q3 2023
Q3 2024
Q3 2025
Source: idealista

Housing profitability in major cities
In the analysis by district capitals (or autonomous regions), Castelo Branco stands out as the most attractive market for housing investment, with a gross yield of 9%. However, it should be noted that in this city the risks are higher. For example, there may be greater difficulty in renting out the property or in its appreciation over time.

The list of the most profitable cities for buying a home to later rent out continues with Bragança (8%), Santarém (7.1%), Coimbra (6.7%), Leiria (6.5%), Viseu (5.9%), Évora (5.8%), Porto (5.7%), Braga (5.6%), Viana do Castelo (5.5%), Aveiro (5.3%) and Setúbal (5.3%).

Meanwhile, the least profitable markets are found in Lisbon (4.6%) and Funchal (4.8%). On the other hand, in these cities the investment risks are lower, with a higher probability of renting out the property and of its value increasing.

How much does buying a home to rent out yield in each city?
Median values
Data from Q3 2025