The Portuguese Government's proposed changes to the country's rental law are set to be voted on by Parliament on September 30. The proposal, which aims to dynamize the housing rental market, includes measures such as faster evictions, new rules for transitioning old rents to the New Urban Rental Regime (NRAU), and greater contractual flexibility. The proposal also includes the elimination of the administrative limit on rent increases.
One of the main novelties of the proposal is the acceleration of evictions. Under the new rules, contracts can be terminated when there are delays of two months or more in paying rent, or when there are eight days of delay in paying rent, more than three times in a row or interpolated, within a period of 12 months. The proposal also eliminates the suspensive effect of the appeal in actions that assess the validity, subsistence, or cessation of rental contracts.
The proposal provides for greater contractual flexibility, allowing for the agreement of advance payment of rents for periods not exceeding three months, and eliminating the limit on the fixing of the guarantee. The initial rent of new rental contracts for housing purposes that affect properties with rental contracts celebrated in the previous five years will no longer be limited to 2%.
The proposal also revises the automatic renewal regime of housing rental contracts with a certain term, eliminating the minimum three-year limit on the automatic renewal period. Landlords will be able to denounce indefinite-term contracts for demolition or renovation work that requires vacant possession, without the condition of maintaining equivalent characteristics to the rented property.
New rules are also proposed for the transition of old rents to the NRAU. Rental contracts prior to 1990 will be submitted to the NRAU, with a five-year celebration deadline, unless there is an agreement between the parties. Exceptions will be made for tenants or families over 65 or with disabilities above 60%, as well as in cases of transmission by death.
The proposal also provides for an extraordinary update of the rent value in contracts celebrated before 1990, up to a maximum annual limit of 1/15 of the taxable property value, but only if the corrected gross annual income of the household is greater than five national minimum wages per year. If it is inferior, the rent update will be made through the application of the annual rent update coefficient.
The Portuguese Real Estate Promoters Association (APPII) has welcomed the proposal, considering that the new rules are essential to increase the housing supply in Portugal and develop a Build to Rent market. The association's president, Hugo Santos Ferreira, stated that a rental market with more supply will give Portuguese families greater freedom to choose where and how they want to live.
Key points
- The proposed changes aim to dynamize Portugal's housing rental market.
- The proposal includes measures such as faster evictions and greater contractual flexibility.
- The Portuguese Real Estate Promoters Association has welcomed the proposal.
