Lisbon: 6th Most Profitable Capital for Renting in Europe

Discover why renting in Lisbon is a lucrative investment. The city ranks 6th among European capitals for rental profitability. Explore the opportunities now.

House rents in Portugal are experiencing a remarkable surge, outpacing many of their European counterparts. This trend renders residential rentals an enticing avenue for investment within our borders. Indeed, as of June this year, Lisbon has emerged as one of the most lucrative European capitals for rental properties. A comprehensive analysis conducted by Global Property Guide, encompassing 32 European nations, positions Lisbon as the sixth most profitable capital for housing investments aimed at rental purposes.

The international real estate consultancy reports that the gross rental yield in Lisbon reached an impressive 5.65% by the end of June. However, it is noteworthy that five other European capitals boast even higher profitability for rental investments. Topping the list is Dublin, Ireland, with an average gross rental yield of 7.33%, followed closely by Rome at 6.82%, Riga at 6.46%, Bucharest at 6.3%, and Podgorica at 5.7%. Conversely, the capitals where rental investments yield the least are Oslo, Norway, at a mere 2.46%, and Luxembourg at 2.58%, according to the same dataset.

Beyond the capitals, the consultancy's examination extends to other Portuguese cities, revealing that Setúbal offers an average rental yield of 6.51%, surpassing that of Lisbon. Meanwhile, cities such as Porto, Faro, Aveiro, and Braga demonstrate average yields exceeding 5%, albeit still trailing behind the Portuguese capital, as reported by Público.

It is imperative to consider that these yield calculations incorporate the tax implications inherent in each country. In Portugal, rental income from residential property has been subjected to an autonomous tax rate of 25% (a reduction from the previous 28%) for short-term rental agreements since the implementation of the Mais Habitação (More Housing) initiative last October. This rate has the potential to decrease further if the rental contract extends beyond three years.

The comparison of tax burdens on residential rentals across European nations is a complex endeavor, given that some markets employ flat rates while others utilize progressive tax structures. Nevertheless, the aforementioned publication suggests that Portugal occupies a middle-ground position regarding the tax burden on rental income, aligning with trends observed in other countries. Consequently, the rental prices in Portugal serve to mitigate the impact of the tax burden, making the investment landscape all the more appealing.