Housing is arguably Portugal's biggest problem right now, and barely a week goes by without it leading the news. House prices rose 17.6% in 2025, the largest increase since the national statistics office (INE) started the series, and the country has been building far below what it needs for years. The Bank of Portugal estimates that, between 2021 and 2024, Portugal fell short by around 14,000 homes a year against the new households being formed. The government's answer, under its "Construir Portugal" (Build Portugal) agenda, was to simplify construction licensing so more gets built, and faster.
That is what Decreto-Lei n.º 108/2026, of 29 May does, the biggest overhaul of Portugal's urban-planning licensing regime in years. It takes effect on 1 October 2026 and, in essence, cuts much of the state's control before the work begins and shifts the responsibility onto the people who carry it out and the people who commission it. That is good news if you want to build. But it has a less obvious consequence: with councils checking less up front, choosing the right builder is no longer an optional precaution, it is your main protection. This article covers both sides, with the law in hand.
Note: this analysis reflects the decree-law as published on 29 May 2026. It will still be fleshed out by implementing regulations and may be adjusted; we will update this article as revisions appear.
The reform did not come out of nowhere: the crisis behind it
The context matters, because it helps you read the reform fairly. Home building in Portugal collapsed over the past decade and a half: according to figures compiled by Pordata, around 125,000 dwellings were built in 2002 and barely 20,000 in 2022. Demand, meanwhile, surged, largely driven by demographics, with new households and immigration. The result is what you see in prices and rents.
The good news is that construction is already responding: licences for new dwellings rose around 20% in 2025, and completions of new homes hit their highest level in 15 years (industry figures reported by idealista). DL 108/2026 wants to accelerate this further. More building on the way is, in itself, a good thing. The question is what comes with it.
What Decreto-Lei 108/2026 changes, in plain terms
The diploma is long (it re-publishes the entire Legal Regime for Urbanisation and Building, the RJUE, and is the 21st amendment to Decreto-Lei 555/99) and also touches the urban rehabilitation regime and the so-called "urban Simplex". You can read it in full in the official gazette (Diário da República). For anyone about to carry out work, three changes matter.
1. Prior notice becomes the normal route
Previously, many works needed a licence, that is, an express decision by the council approving the project. Now, whenever the urban-planning parameters are already defined, the work proceeds by prior notice (comunicação prévia): the developer submits the documents, pays the fees and can start, without waiting for an act of approval. The preamble to the law is candid about what this means, acknowledging that prior notice "no longer actually constituted a mechanism of prior control of urban operations". In other words: the council checks less before the work, and more afterwards (so-called successive control, which still exists and can lead to stop orders).
2. The council's silence can count as approval (tacit approval)
The reform generalises tacit approval (deferimento tácito). The term is technical, but the idea is simple: if the council does not respond within the deadline, the request is approved by silence alone. It exists to stop applications sitting idle for months, which is good. In practice, though, it means a work can be formally approved without anyone having actually checked the project in depth, and it may still be non-compliant.
3. More works exempt, and shorter deadlines
Certain reconstruction works and energy-efficiency improvements become exempt from a licence or prior notice, and decision deadlines get shorter. For a good-faith owner with a simple project, that is time and money saved. The law also reinforces a concrete protection for buyers: in property transactions, it becomes mandatory to declare whether an urban-planning title exists and whether the seller states they hold it or not, a change the Portuguese Notaries' Association praised publicly as buyer protection.
What this means if you are building or renovating
In practice, you gain speed. Fewer loops, less waiting, a better chance of your work starting on the timeline you planned. If you hired a serious company, with an adequate licence and a well-prepared project, the reform works in your favour.
But there is a shift in responsibility you need to grasp. When the state stops validating the project at the gate, the burden of making sure everything is right moves to whoever submits and whoever commissions the work. And the law does not leave this vague: the new regime widens joint and several liability. Article 100.º-A of the RJUE provides that, for works carried out without the proper procedure or not in compliance, the developers and owners of the work, the contractors and the site managers are jointly and severally liable. Put simply: if the work goes wrong through the fault of whoever carried it out, the owner can be dragged into the liability too. Checking who you hire stopped being diligence, it is protection.
Not sure how your own project is classified? We built a free tool for exactly that: answer three questions and see whether your project likely requires a permit (licença), a prior notification (comunicação prévia) or is exempt under the new regime, with the legal basis cited and what changes on 1 October. Try it: which permit does your project need? The result is indicative and also tells you what to confirm with your local council.
The effect almost no one is talking about: less prior control, more room for bad actors
This is the part barely anyone is talking about, and it is the one that worries us most. A faster system with fewer filters at the gate is better for the majority, but it is also more permeable to those who never had good intentions. And the numbers on the ground are not reassuring.
Complaints against building firms are rising fast. According to Portal da Queixa data reported by Renascença, complaints over poorly executed work, damage or breach of contract went from 314 in 2024 to 461 in 2025, and in the first quarter of 2026 they had already grown almost 78% year on year. The consumer body DECO receives around a thousand complaints a year about building work, and admits the real figure is higher, because many people do not complain for fear of harming the relationship with whoever is doing the work.
And there is a step above badly done work: outright fraud. Companies that take the deposit and vanish, paid jobs that never start, builders that leave dozens of families without a home and without the money they advanced. These are not small or isolated cases, some have been national scandals. We have gathered several of these real cases, with the official public records alongside the accounts that came to light, on our construction fraud cases page. The pattern repeats too often to be bad luck.
At the same time, construction is a sector that opens a lot and closes a lot. In 2026 it leads the creation of new companies, but insolvencies in the sector also rose (around +28% in the first four months of the year, according to Informa D&B data reported by idealista). Companies that open and close easily are exactly the ground where the phoenix-company pattern appears. Closing a company is not, in itself, illegal. The problem starts when the same pattern repeats: debts, creditors left unpaid, a new company, a new name, and the same people behind it.
We are not the only ones flagging the risk. When the "urban Simplex" that underpins this reform went out to consultation, the professional bodies warned about it. The Portuguese Architects' Association summed it up in a line that still holds: "if excessive red tape is bad, zero red tape can also be dangerous". The Engineers' Association went further, holding that replacing prior control with a simple declaration of responsibility is, in some cases, insufficient. The reform pressed ahead, and probably rightly so, but the warning stands: when the state's control shrinks at the gate, control of the risk passes to you.
The law itself acknowledges the risk
DL 108/2026 is not naive. While it simplifies, it tightens the consequences for those who act badly, and this is where the law backs up a simple idea: what counts is who is behind the company, not the name on the sign.
- Heavy fines. Work without an urban-planning title, or not in compliance with the licence, can cost a company up to €450,000 (Article 98.º of the RJUE).
- Crime enters the picture. Continuing a work that has been stopped is the crime of disobedience, and false statements in the works logbook or in declarations of responsibility amount, in the law's words, to "the crime of forgery of documents, under Article 256.º of the Penal Code" (Article 100.º).
- The phoenix pattern now echoes in the law. Article 99.º provides that a ban on activity applied to a company "extends to other legal persons formed by the same shareholders". The law itself points to what we have always argued: look at the people behind the company, not just the firm's name. (For accuracy: this ban applies at the level of the municipality where the offence occurred, "up to a maximum of four years".)
Notice what this draws. Enforcement of offences is concentrated in each municipal council, council by council. But a builder with a trail of problems in one place (insolvency proceedings, debts, court actions) can simply go and work in the next municipality, where no one knows them. That trail exists and is public, but it is scattered across dozens of official sources and is not gathered in a single place where an owner can see it before signing. That is exactly the gap ObraXRAY exists to fill.
Verification is now your best protection
If the state checks less at the gate, the checking has to be yours. The good news is that you have rights and tools. Before signing a contract or paying a deposit, do this:
- Confirm the IMPIC licence. Anyone carrying out construction must hold an IMPIC licence or certificate (alvará), and the class defines the maximum value of work they can do. It is public and you can check it on the IMPIC website. Without an adequate licence, stop here.
- Check the history of the company and of those who run it. Insolvency proceedings, debts, enforcement actions, sanctions, and links to earlier companies that went wrong. A clean name on a new company means nothing if the same people left a trail in another firm.
- Put everything in writing and pay in stages. A detailed written quote, a contract, and staged payments as the work progresses, never a large advance up front. Always demand an invoice, it is what lets you complain later.
- Know your guarantee. The Civil Code (Article 1225.º) gives you, as a rule, a 5-year guarantee on building or repair work to immovable property: during that period, the builder is liable for serious defects and collapse. Report defects in writing as soon as you spot them.
Step 2 is the hardest to do on your own, and it is what ObraXRAY solves. We built proprietary technology and our own systems to aggregate data from official public sources (CITIUS, IMPIC, the Tax Authority, Social Security, the labour authority ACT and corporate filings, among others) and cross-reference it into a single report per tax number (NIF). That is more than 20 automated checks: we classify the stage of insolvency proceedings, confirm construction licences, cross-reference the people linked to several companies, and turn scattered records into a clear risk verdict. What would take days to assemble, if you knew where to look, appears in one search.
What this means for Portugal
On balance, the reform is necessary and, in large part, welcome. Portugal needs to build far more to ease the housing crisis, and a licensing process that took too long was part of the problem. More homes, faster, is the right path for more people to have access to a home.
But speed has a price in trust. A system that controls less at the gate only works well if whoever hires controls better before signing. The law itself admits as much, by reinforcing buyer protection and widening liability across the whole chain of the work. The reform gives Portugal more construction; it is up to each owner to make sure their own build is in good hands. Verification is the natural counterweight to simplification, and it is the part that is in your hands.
About to start a project? Before you sign anything, search the builder's tax number (NIF) on ObraXRAY and see what the public records say about them. It takes less than a phone call, and it could save you the whole job.