Portugal’s Rental Rules Could Face Major Changes as Landlord Protections Strengthen and Contract Restrictions Are Eased
Portugal’s rental market could be heading for another significant adjustment. The government’s proposed reform of the urban rental regime is set for a parliamentary vote in principle on September 30, covering a range of issues including rent arrears, eviction procedures, security deposits, advance rent payments and rent adjustments for new contracts. The overall direction of the reform is to increase contractual flexibility in the rental market while strengthening landlords’ ability to recover their properties when tenants breach their contractual obligations.
One of the most closely watched changes concerns the termination of rental contracts following rent arrears. Under the government’s proposed rules, landlords would be able to terminate a lease once a tenant has accumulated two months of unpaid rent, compared with the current threshold of three months. The reform also aims to simplify related procedures and accelerate the repossession of properties where a judicial decision has already been issued, reducing situations in which landlords are unable to recover their properties for extended periods.
Beyond default and eviction procedures, the proposal would give both landlords and tenants greater contractual freedom. The government plans to ease restrictions on security deposits and advance rent payments, allowing landlords to request up to three months’ rent in advance. At the same time, the existing 2% cap on rent increases for certain new rental contracts is also expected to be removed, allowing rents under new agreements to be determined to a greater extent by market conditions and negotiations between the parties.
The government considers one of the key challenges facing Portugal’s rental market to be the reluctance of some property owners to place vacant homes on the long-term rental market due to concerns over tenant default, contractual restrictions and lengthy property recovery procedures. One of the main objectives of the reform is therefore to increase contractual flexibility and legal certainty, restoring landlords’ confidence in long-term rentals and encouraging more properties to enter the rental market.
When approving the reform proposal in July, the Portuguese government said the new framework would focus on four main areas: expanding contractual freedom, strengthening responsibility for compliance with contractual obligations, simplifying and accelerating eviction and dispute-resolution procedures, and increasing the state’s responsibility for providing social protection to vulnerable households.
This also means redefining the respective responsibilities of landlords, tenants and the state. Tenants who comply with their contractual obligations would continue to have their rental rights protected by law. However, in cases of prolonged rent arrears or other contractual breaches, landlords would have access to clearer and faster procedures. For vulnerable households that lose their homes due to financial difficulties, the government plans to provide support through the Housing Emergency Fund (Fundo de Emergência para a Habitação), rather than leaving private landlords to bear these social costs over the long term. The fund is intended to provide financial assistance for accommodation or rehousing to households facing housing emergencies.
However, the reform has also raised concerns among tenant and consumer protection organisations. Portuguese consumer protection association DECO has warned that more flexible rules on deposits, advance payments and rent-setting mechanisms could increase the upfront financial burden on tenants. Tenant organisations have also expressed concerns that changes to certain contractual provisions and older rental agreements could weaken existing tenant protections.
The government has nevertheless retained specific safeguards for certain vulnerable tenants. For rental contracts signed before 1990, tenants aged over 65 and those with a disability level of 60% or more would continue to benefit from specific protection mechanisms, including restrictions on rent adjustments where the relevant conditions are met.
Overall, the reform reflects an attempt by Portugal’s housing policy to address a longstanding challenge: how to encourage more private property owners to place homes on the long-term rental market while continuing to protect tenants’ rights.
If the proposal ultimately receives parliamentary approval, Portugal’s rental market would move further away from stronger administrative restrictions towards a framework that places greater emphasis on contractual freedom and compliance with contractual obligations. For landlords, this would mean greater flexibility in dealing with defaults, setting rents and structuring rental agreements. For tenants, it would make it increasingly important to pay close attention to rent levels, deposits, advance payment requirements and default provisions when signing a lease.
Ultimately, whether the reform succeeds in bringing more vacant homes into the long-term rental market while striking a balance between increasing housing supply and protecting tenants will be one of the key issues to watch in Portugal’s rental market.
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