Regulations governing rental investment contracts

Ordinance 447-A/2026/1 of September 30 has been published in the Official Gazette of the Republic of Portugal. It regulates the regime on Rental Investment Contracts (“RICs”), approved in annex I to Decree-Law 97/2026 of May 20.

The ordinance entered into force on October 1, 2026. It completes the framework through which investors, real estate developers and funds may access stable tax benefits for up to 25 years when investing in residential rentals.

For further information on Decree-Law 97/2026 of May 20, see our Practical guide: Tax relief measures for housing.

An investor enters an RIC with the Housing and Urban Rehabilitation Institute (“IHRU”), which acts on behalf of the state. During its term, the RIC provides the following benefits:

• An exemption from property transfer tax (“IMT”) on the acquisition of (i) land for construction and urban properties intended for the construction or rehabilitation of buildings for residential rentals; and (ii) urban or mixed-use properties, or individual units, intended for residential rental or subrental.
• A stamp duty exemption on transfers of the properties described in the first point.
• An exemption from municipal property tax (“IMI”) for up to eight years, beginning in and including the year of acquisition, for the properties described in the first point.
• A 50% reduction in the IMI rate for the remainder of the RIC’s term, subject to the limit in article 16.3 of the Local Authorities Finance Regime, for the properties described in the first point.
• An exemption from Additional IMI throughout the RIC’s term for the properties described in the first point.
• A reduced VAT rate of 6% on construction or rehabilitation contracts under item 2.42.2 of List I to the value-added tax (“VAT”) Code.
• A refund of 50% of the VAT incurred on architectural and engineering services, as well as on projects and studies relating to the construction or rehabilitation of the properties. Projects and studies for urban development are excluded.
• A 50% reduction in the stamp duty rate under item 29.2 of the General Stamp Duty Table. The reduction reflects the proportion of alternative investment undertaking (“AIU”) assets allocated to residential rental contracts or subletting contracts covered by an RIC.

Note: The 50% reduction in the stamp duty rate applies specifically to AIUs. It is calculated according to the proportion of assets allocated to contracts covered by an RIC.

Important note: The IMT and IMI exemptions and the 50% reduction in the IMI rate require a municipal assembly resolution. The municipal council must submit the proposal under articles 16.2 and 16.3 of the Local Authorities Finance Regime.

Investors are also protected by a right to restore economic and financial balance under article 282 of the Public Contracts Code, should legislative changes affect the investment.

Eligible investments include the acquisition, construction or rehabilitation of buildings for residential rental or subrental. The properties must meet the following conditions:

• At least 700/1000 of the total construction area must be allocated to residential rental.
• The monthly rent must not exceed the moderate-rent threshold. This threshold is 2.5 times the 2026 guaranteed monthly minimum remuneration, i.e., which is currently €2,300.
• Rent updates must comply with article 24 of the New Urban Lease Regime and may not exceed the maximum threshold.
• Properties involving construction or rehabilitation must be allocated to residential rental within five years of signing the RIC, while existing properties acquired for rental must be allocated to residential rental within one year of signing the RIC.
• Each property must be rented for at least eight months in every year of the RIC’s term.

If the RIC covers affordable rental housing, the limits under the Simplified Affordable Rental Regime (“SARR”) also apply.

In cases of public–private partnerships (“PPP”) governed by Decree-Law 111/2012 of May 23, the RIC has the same term as the partnership agreement.

Individuals, legal entities and other entities may enter an RIC if they have:

• technical and management capacity;
• organized accounts;
• taxable income not determined using indirect methods;
• regularized tax and social security status;
• complied with the general requirements applicable to their activities, which is a new requirement not included in the decree-law.

To demonstrate technical capacity, an investor must have more than three years of proven experience in: real estate investment or development; real estate management; or residential rental management. For investment structures and special purpose vehicles (“SPV”), pertinent experience may also be demonstrated by: shareholders holding at least 25% of the SPV; entities in which the SPV holds at least 25%; and members of the SPV’s management bodies.

The investor must continue to meet all requirements, except the technical-capacity requirement, throughout the RIC’s entire term.

Applications must be submitted through the IHRU’s electronic platform and include:

• identification of the investor;
• evidence of title, including ownership, surface rights, usufruct, or a promissory purchase agreement;
• a description of the investment and the proposed works;
• the pertinent areas and estimated number of dwellings;
• the proposed term, which must be between 10 and 25 years, unless the PPP term applies;
• access codes for the tax and social security certificates; and
• a sworn statement in the form set out in annex I to the ordinance.

The sworn statement contains stringent commitments concerning insolvency, money laundering, international sanctions, insurance, and good standing. The international sanctions commitments cover the UN, EU, OFAC, and UK regimes.

Failure to comply with these commitments may result in termination of the RIC.

The table below lists the legal deadlines for applying for and entering an RIC:

Note: If an application expires, the investor may submit a new application and reuse any information that remains valid.

No works—or conservation works only—with no change of use: The dwellings must be identified in the application itself.

Construction, extension, alteration, reconstruction, or change-of-use works: The investor must notify the IHRU within 20 days after the use permit is issued under the Legal Regime on Urbanization and Building (RJUE). The list must follow annex II and include the reference number, land registration details, tax registration details, property type, areas, and use permit. It becomes an annex to the RIC.

Leases entered for residential subrental must expressly address the following provisions; otherwise, the landlord may terminate the lease:

• Identification of the dwellings
• Their exclusive allocation to the designated purpose
• Compliance with the rent threshold
• Compliance with the SARR, where applicable
• The duty to provide information to the investor
• Cooperation with inspections by the IHRU and the Portuguese Tax and Customs Authority (“AT”)

• Annual implementation report: The investor must submit the report by the end of January each year. The IHRU must notify the AT by the end of February.
•  Information requests: The investor must provide information when requested to do so by the IHRU.
• Amendments: The parties must formalize any amendments through an addendum.
• Assignment of contractual position: Any assignment of contractual position requires authorization (decision within 10 days of an IHRU proposal) and must include all properties. The assignee must also satisfy the applicable eligibility requirements.
• Land registration: The requirement for prior authorization to transfer properties covered by an RIC constitutes an encumbrance that must be registered with the land registry. The IHRU must register it free of charge. The terms of the land registration requirement will be established in an ordinance issued by the government members responsible for housing and justice. The registration expires when the RIC’s term ends. It may also be canceled or reduced on the basis of an IHRU declaration.
• RIC certificates: Investors may obtain RIC certificates automatically and free of charge through the platform. These certificates may assist with financing and due diligence.
• Grounds for terminating an RIC: The government members responsible for finance and housing may terminate an RIC, following a proposal from the IHRU, if the investor:
• fails to comply with the RIC’s conditions and obligations for reasons attributable to the investor;
• fails to meet its tax or social security obligations on time; and
• refuses, unjustifiably, to provide information to the IHRU or provides false information.

If the RIC is terminated for breach, the IHRU must notify the AT within 20 days. The investor must repay the tax benefits, together with compensatory interest under article 35 of the General Taxation Law, within 30 days. Failure to repay the amounts due may result in enforcement proceedings. Amounts repayable:

• One hundred percent of the benefits if the breach occurs during the first 10 years of the RIC
• Fifty percent of the benefits if the breach occurs after the first 10 years but before the final 5 years
• Thirty percent of the benefits if the breach occurs during the final five years.

The ordinance makes the RIC regime operational and strengthens legal certainty for build-to-rent investment.

Considering these developments, businesses should:

• assess their project pipelines against the 700/1000 ratio and the rent threshold;
• structure investment vehicles to draw on the group’s experience;
• prepare the compliance due diligence required for the sworn statement, particularly as regards anti-money laundering and sanctions;
• engage with municipalities early regarding the resolutions required for the IMT and IMI benefits; and
• include the mandatory provisions in residential subrental contracts.

Can a newly incorporated SPV enter an RIC?

Yes. However, it must demonstrate the pertinent experience of shareholders holding at least 25%, entities in which they hold at least 25%, or members of its management bodies.

What is the minimum term of an RIC?

The minimum term is 10 years, and the maximum is 25 years. If the investment forms part of a PPP, the partnership term applies.

Can the project be sold during the RIC’s term?

Yes. However, any assignment of the contractual position under the RIC must comply with the following cumulative requirements:

• Full transfer of the properties: All properties allocated, or to be allocated, to residential rental must be transferred to the transferee in full.
• Eligibility of the assignee: The assignee must satisfy the eligibility requirements applicable to investors. These include technical capacity, organized accounts, and regularized tax and social security status.
• Express assumption of obligations: The agreement must expressly provide that the assignee assumes all conditions and obligations under the RIC. Otherwise, the transaction is void.
• Prior notice to the IHRU: The investor must notify the IHRU of the proposed sale at least 20 days in advance.
• Registrable encumbrance: The authorization requirement for the transfer of properties allocated to residential rental under an RIC is an encumbrance that must be registered with the land registry. The IHRU must arrange the registration free of charge, and the registered encumbrance expires when the RIC ends.
• Authorization order: The assignment requires an order from the government member responsible for housing, following a proposal from the IHRU. The order must be issued within 10 days.
• Addendum to the RIC: The IHRU, assignor and assignee must formalize the assignment through an addendum to the RIC.

What happens if the law changes during the RIC’s term?

The investor benefits from the right to restore economic and financial balance under article 282 of the Public Contracts Code.

Legislative or regulatory changes may affect the rules governing how rents are set or increased, or another pertinent contractual regime. In such cases, the investor is entitled to compensation.

Are the RIC benefits compatible with the SARR?