Affordable letting or moderate rent: which pays a landlord more

On 1 September the regime simplificado de arrendamento acessível (RSAA — the simplified affordable-letting regime) came into force, approved as annex iii to Decreto-Lei n.º 97/2026, de 20 de maio (the Portuguese housing tax package). On the same date Decreto-Lei n.º 68/2019 and Decreto-Lei n.º 69/2019, which underpinned the old Programa de Apoio ao Arrendamento (the previous affordable-letting programme), were repealed.

For anyone letting a property for housing, there are now two distinct tax benefits — and choosing the wrong one costs money. One exempts the rent from tax but forces you to lower it. The other taxes it at 10% but leaves the rent alone. They do not stack.

The starting point: what you pay with no benefit at all

Article 72.º of the Código do IRS (personal income tax code) taxes residential rental income at a flat rate of 25%. That rate falls with the length of the contract:

• a contract of 5 to 10 years: a 10-point reduction, so 15% (each renewal of equal length takes off a further 2 points, capped at 10 points across renewals);
• a contract of 10 to 20 years: a 15-point reduction, so 10%;
• a contract of 20 years or more: a 20-point reduction, so 5%.

Outside housing — shops, offices, warehouses — the rate is 28% and neither of these benefits applies.

Option A: moderate rent, 10% and nothing else to do

Article 45.º-C of the Estatuto dos Benefícios Fiscais (tax benefits statute), added by the same decree-law, sets a flat rate of 10% on rent from contracts used exclusively for housing where the monthly rent does not exceed €2,300 — 2.5 times the 2026 retribuição mínima mensal garantida (statutory minimum wage), which is €920.

What you have to do: nothing in particular. There is no minimum contract term, no application, no separate registration. If the rent fits under the ceiling, the rate applies.

Three details that matter:

• It runs until 31 December 2029. This is a benefit with an end date.
• It applies unless a more favourable rate is available — on a contract of 20 years or more, the 5% still wins, not the 10%.
• For IRC (corporate income tax), or for category B personal income tax with organised accounts, the effect is different: only 50% of the income is taken into account, under paragraph 2 of the same article.

Option B: affordable letting, 0% but with the rent capped

The RSAA fully exempts rent from IRS and IRC, under article 6.º(1). In exchange, it imposes three conditions:

• A rent ceiling. The rent must be at or below a maximum per property type, set by portaria (ministerial order) and calculated on the basis of 80% of the median rent published by the INE (national statistics institute) for the concelho (municipality) where the property is located — and that order may take account of energy efficiency and the availability of private parking.
• A minimum term. Three years for permanent residence; three months for temporary residence, the case of a tenant whose tax residence is in a different concelho.
• Registration. The landlord files on the IHRU (national housing institute) online platform, by 15 January of the year following the signing, a copy of the contract and proof that it was reported on the Portal das Finanças. The IHRU notifies the Autoridade Tributária (tax authority) by the end of February, and the exemption takes effect from the date of signing.

Two warnings that are not on the surface:

• If you opt for aggregation, the exempt income is compulsorily aggregated to determine the rate applied to your other income, under article 6.º(2). The rent pays no tax, but it can push the rest of your personal income tax up a band.
• Breaching the conditions costs you the benefit from the moment it happens, with an obligation to settle the difference in tax for each year, plus compensatory interest, under article 7.º.

Anyone who already had contracts under the old Programa de Apoio ao Arrendamento keeps the tax effects granted to them, under article 15.º(2). Nothing needs redoing.

Side by side

The sums, on a rent of €1,100 a month

Thirteen thousand two hundred euros of annual rent, individual landlord:

The last line is the surprise. Zero tax on a lower rent can leave you with less than 10% on the market rent.

The tipping point: 89% of the concelho median

The sum that matters is simple. Under moderate rent you keep 90% of the rent. Under affordable letting you keep 100% of a rent capped at around 80% of the concelho median.

Affordable letting pays off when 80% of the median is more than 90% of the rent you could get on the market — that is, when your market rent is below roughly 89% of the concelho median.

Translated into concrete cases:

• A property that lets above the concelho median — well located, refurbished, with a garage: moderate rent wins almost every time. Coming down to the affordable ceiling costs more than the 10% tax.
• A property that lets below the median — older, on the outskirts, a large layout in a cheap area: affordable letting wins, and in some cases it even lets you raise the rent to the ceiling and still pay no tax.
• A property sitting on the median: moderate rent wins, but only just. There the other factors decide — the three-year term, the aggregation rule, the 2029 cut-off.

So, it depends on...

• It depends on where your rent sits against the concelho median. Below roughly 89% of it, affordable letting nets you more, even with the rent capped. Above it, moderate rent nets you more.
• It depends on how long you want to commit. Affordable letting ties the property up for three years and claws the tax back with interest if you leave early. Moderate rent ties up nothing.
• It depends on the rest of your income tax. If you have significant other income and expect to opt for aggregation, the compulsory aggregation of the exempt rent can eat much of the benefit.
• It depends on your horizon. Moderate rent ends on 31 December 2029; the RSAA has no end date. For landlords on long contracts, that counts.
• And if the contract runs 20 years or more, you need neither: the 5% under article 72.º already beats the 10% of the moderate-rent regime.

Before signing, check the ministerial order for the rent limit in force for your concelho and for the property type. That figure, not the raw median, is what decides the sum.