After extensive parliamentary debate, the State Budget for 2026 (OE2026) was finally approved in the final overall vote on Thursday, November 27. And it brings several new developments in the field of housing and real estate, such as the sale of public properties aimed at increasing the supply of affordable homes in Portugal. But there were others that did not move forward. And fiscal measures, such as the reduction of VAT to 6% for construction, still have to be presented and go through Parliament’s scrutiny.

The approval of OE2026 reflects several concessions from Montenegro’s Government, with the document including 163 amendments. The parties that support the AD Executive, PSD and CDS-PP, were those that achieved the most victories (41), many of them correcting errors in the original document. The opposition managed to pass a total of 122 measures during the specialty phase, with the PS leading (31 approved measures), followed by the PCP (22), Chega (20), and PAN (19).

This is why the OE2026 bill ended up receiving the green light in the final vote with the PSD and CDS-PP voting in favor and the PS abstaining. All other parties voted against. But which housing and real estate measures were approved? And which were left out? What still needs to be done? We explain it point by point.

The housing measures approved in OE2026

From schools to highways: new projects in 2026
The housing measures that were left behind…
What will still change in housing after OE2026

The housing measures approved in OE2026

To begin with, the Government may move forward with the sale of State-owned real estate to be used for housing purposes. This is because the PS proposal submitted to try to prevent it was rejected by right-wing parties. Thus, Prime Minister Luís Montenegro will be able to put up for public auction the 16 State-owned properties already identified and establish public-private partnerships on 14 public land plots, with the goal of “making up to 10,000 homes available for affordable rental by the end of 2035.”

One of the PS proposals that was approved allows municipalities to grant real guarantees on properties within rental support programs. In practice, this means that municipalities can grant real guarantees over properties and even the income generated by them in the case “of medium- and long-term loans financed by repayable funds from the PRR [Recovery and Resilience Plan] and intended for the public stock of affordable housing,” as well as “within the financing of municipal programs for access to housing, namely support for urban rental.”

From Chega, a budget amendment proposal was approved revising the rules for issuing residence certificates for foreign citizens, limiting the number of certificates per household. For André Ventura, this is a “measure that protects residents, safeguards urban heritage, combats illegal immigration and prevents document fraud.”

Sale of public properties

Credits: Gonçalo Lopes | idealista/news

From schools to highways: new projects in 2026

In the area of infrastructure, a PS amendment to OE2026 was approved to ensure budgetary funds for municipalities to rehabilitate schools. Thus, the Government “is authorized to make the necessary budgetary changes to guarantee the transfer of funds to local authorities under the School Recovery and Rehabilitation Program.”

A PCP initiative was also approved to progressively eliminate “existing and identified” architectural barriers. With this measure, the communist party intends for the Government to make the necessary adaptations “to ensure proper accessibility for people with reduced mobility.”

Parliament also approved two Chega proposals regarding the construction of highways in Coimbra and Castelo Branco, as well as an initiative to launch the IC6 project in Seia.

Highway construction in Portugal

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The housing measures that were left behind…

This is not the first time it has been voted on in Parliament—and once again it failed. We’re talking about the legislative change that would allow all homeowners to deduct part of the interest paid on mortgage loans from their IRS. Proposals from PAN, Chega, PCP, and BE to amend OE2026 in this direction were rejected. It should be noted that the idea aims to standardize the rules, since those who bought a home after 2012 cannot deduct interest, while those who bought before can.

The extension of the exemption from early repayment fees on variable-rate mortgages was also rejected, following the rejection of proposals from the PS and Chega, which, although different, had that objective.

In terms of integration, a point from the PCP proposal aimed at creating “a multiannual financing program for adapting and eliminating architectural barriers in the homes of disabled people with reduced mobility” was rejected.

OE2026 approved in Parliament

Debate on OE2026 in Parliament
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What will still change in housing after OE2026

In the OE2026 bill, now approved, the Government sought to reflect its strategic vision to address the housing access crisis in the country and ensure more affordable housing. In this sense, the Executive intends to increase the public and private supply of housing, as stated on the official website of the document:

  • Make 59,000 homes available over the next six years (33,000 new units under the PRR);

  • Build 12,000 homes, which will integrate the Rental Support Program, through a credit agreement with the European Investment Bank (EIB);

  • Increase public housing supply, with €930 million planned for 2026 for public programs of promotion and rehabilitation to cover 22,000 people;

  • Mobilize, in a complementary way, public property (buildings and land) for housing projects;

  • Promote moderate-rent housing supply, strengthening the protection of families in particularly vulnerable situations;

  • Continue the rehabilitation of housing blocks, allowing GNR military personnel and PSP police officers, at the beginning of their careers and assigned away from their home regions, to access housing.

In addition to these measures, the Government has also reinforced by €350 million the amount allocated to the public guarantee for young people up to 35 years old buying their first home. And it intends to maintain the IMT exemption for young people purchasing their first home, with the value limits of properties increasing by 2% next year to €330,539 (full exemption) and €660,982 (partial exemption) through the adjustment of IMT brackets included in OE2026.

VAT at 6% on home construction

Housing fiscal package to go to Parliament after OE2026
Credits: Gonçalo Lopes | idealista/news

There are also several fiscal measures in the housing area that Montenegro’s Executive wants to advance, but which require their own legislation to be presented and voted on in Parliament, and thus fall outside OE2026. To move forward in this direction, the Council of Ministers approved last Thursday the bill aimed at encouraging home construction and rental through tax reductions.

This includes reducing VAT to 6% on the construction of homes for sale or rental at moderate prices (€648,000 in the case of sale and €2,300 in the case of rental), a measure that will be part of a legislative authorization request, which will include retroactive effect to reduce uncertainty in the market.

Other measures included in this fiscal package—soon to be presented by Montenegro to Parliament—aim to encourage property owners to place homes on the rental and sale market at moderate prices. The planned tax benefits include:

  • increasing to €900 the IRS deduction for housing rent expenses at moderate prices in 2026;

  • reducing the IRS rate applied to landlords from 25% to 10% for rental contracts at moderate prices;

  • eliminating IRS capital gains on the sale of homes if the amount is reinvested in properties intended for moderate-rent rental;

  • implementing temporary IMT and IMI exemptions for properties intended for moderate-rent leasing.

“In addition to encouraging supply, the aim is also to eliminate bureaucratic barriers surrounding the real estate market, in particular speeding up the licensing processes for home construction and revising Municipal Master Plans (PDM),” the Government stated in the OE2026 proposal. On the table is, for example, the revision of the Legal Framework for Urbanization and Building (RJUE) to simplify administrative procedures.