New rental rules: what changes for landlords and tenants

The measures were approved by the Council of Ministers on July 9, 2026, and are part of the Build Portugal strategy. The Government's stated goal is to restore the confidence of property owners, put more houses on the market, and ensure that the protection of vulnerable families is supported by the State.

But it is important to clarify a key point right away: these changes are not yet in effect. What was approved by the Government will still have to go through the legislative process, and may undergo changes before the final version is published.

The Portuguese rental market has been living in a difficult balance for several years:

On one hand, there are few houses available and rents have been increasing in high-demand areas.

On the other hand, many property owners remain hesitant to put properties on the market due to rule instability, eviction process durations, and the risk of accumulating overdue rents.

The Government aims to address this issue through 4 main ideas: more freedom in contract negotiation, greater enforcement of compliance, faster judicial processes, and more direct state intervention in social emergency situations.

Below is a summary of the intentions that have been disclosed.

Index

• End of the 2% limit on rents for new contracts
• Up to 3 rents may be paid in advance
• Deposits with greater freedom of negotiation
• Automatic renewal of contracts
• Communications via email
• Tenant's right of first refusal
• Eviction after 2 months of overdue rents
• Frequent delays in rent payment
• Eviction processes simpler and faster
• State payment of rents during the process
• Contracts prior to 1990
  • Major renovations and relocation
  • Transmission of old contracts
• Emergency Housing Fund
• What changes for property owners?
• What changes for tenants?
• Will the measures lower rents?
• When will the new rules come into effect?
• A reform seeking to restore confidence
• Frequently asked questions about the new rental rules

(Top▲)End of the 2% limit on rents for new contracts

One of the changes with the greatest impact is the early end of the limit applied to rents for certain new contracts.

Currently, when a house has been rented in the previous five years, the rent for a new contract is conditioned by the last practiced rent, the legal update coefficient, and an additional margin of 2%.

The Government intends to eliminate this limit before 2029, allowing the rent value to be freely negotiated between the owner and the tenant when entering into a new contract.

This does not mean that the landlord can freely increase the rent during a contract that is already in effect.

In current contracts, the agreed rules between the parties remain. When the contract does not establish a different regime, the update continues to follow the legal coefficient published annually.

It is an important distinction: the freedom of setting applies to the rent of a new contract and not to unilateral increases during the existing contract.

(Top▲)Up to 3 rents may be paid in advance

In future contracts, the owner and tenant may agree on the advance payment of up to 3 rents. Currently, the advance is limited to 2 months.

The new rule allows more freedom in negotiation, but does not require the tenant to pay 3 months in advance in all contracts. It is an option that must be accepted by both parties and properly recorded in the contract.

The Government admits, for example, that the advance of more rents could be negotiated as a counterpart for a longer contract or a lower monthly amount.

(Top▲)Deposits may be negotiated with greater freedom

The deposit should also no longer be subject to the current limit equivalent to 2 rents. The value can be defined by the parties at the time of contract signing, considering the property, the duration of the lease, the existing furnishings, and the risk associated with the contract.

The deposit should not be confused with rent. It is a guarantee intended to cover any debts, damages to the property, or other obligations that have not been fulfilled.

At the end of the contract, the amount should be returned to the tenant, unless there are amounts duly justified to be deducted.

This change may provide greater security to some owners, but it may also make access to renting more demanding. A family that has to bear 3 months of advance rent, a high deposit, and other moving expenses may need several thousand euros to move into a house.

Therefore, it is important, even for the owner, that the value of the guarantees remains proportional and reasonable. It is important not to forget that for each month the house remains on the market, unrented, it is a potential rent that the owner loses. Add this value after 2, 3, or 4 months and it will be easy to see that too many restrictions will be detrimental to the owner's interest.

(Top▲)The landlord may more easily prevent automatic renewal

The reform aims to eliminate some barriers currently applicable to opposition to the automatic renewal of contracts.

The owner may communicate that they do not intend to renew the contract, provided they respect the notice period provided by law and the conditions that have been agreed upon.

This does not mean that the landlord can terminate the contract whenever they want. The initial duration remains and must be fulfilled.

What changes is the possibility of preventing renewal at the end of the term, without some of the restrictions that currently extend certain contracts beyond the initially planned period.

(Top▲)Communications via email

Landlord and tenant may agree that communications related to the contract are carried out electronically.

This possibility may simplify notices of rent updates, communications about renewal, and other notifications related to the lease.

Even so, it is advisable that the contract clearly identifies the email addresses to be used and that important messages are sent by a means that allows for proof of content, date of sending, and receipt.

A simple informal exchange of messages may not be sufficient when it comes to a communication with legal effects.

(Top▲)The right of first refusal does not disappear

The tenant will still be able to exercise the right of first refusal in the purchase of the rented house, when the conditions provided by law are met.

The reform intends, however, to adjust this right in situations where its exercise may cause considerable harm to the owner, particularly when it involves the sale of an entire building.

Even in cases where the tenant cannot exercise the right of first refusal, the lease contract remains and will be transferred to the new owner. In other words, the sale of the property does not, by itself, determine the end of the contract.

(Top▲)Eviction may proceed after 2 months of overdue rents

Another of the most relevant changes concerns non-payment of rent. The Government intends to allow the landlord to terminate the contract when there are 2 months of overdue rents. Currently, the law requires a longer period of delay.

This change does not mean that the tenant is immediately removed from the house after 2 months. The owner will have to follow the legal procedure, communicate the termination of the contract, and resort to the appropriate mechanisms to obtain the eviction of the property.

What changes is the point at which the landlord can initiate this process.

(Top▲)Frequent delays may also lead to the end of the contract

The reform also aims to make the regime applicable to repeated delays more stringent. According to the measures presented:

The contract may be terminated when the tenant is more than 8 days late in paying the rent more than 3 times, consecutively or intermittently, during a 12-month period.

The contract may also be terminated when there are more than 4 delays in an 18-month period.

This rule seeks to address situations where the rent is eventually paid, but the delay repeats systematically, creating instability for the owner.

For both parties, it will become even more important to keep receipts, bank statements, and communications related to payments.

(Top▲)Simpler and faster eviction processes

The Government wants to reduce bureaucracy in eviction procedures, eliminate repeated notifications, and concentrate in one process the decisions related to the return of the house and the recovery of overdue rents.

Norms that have given rise to different interpretations from court to court should also be clarified. The intention is to allow for a quicker recovery of the property when there is a clear decision and no relevant doubts about non-compliance.

Tenants who comply with the contract maintain their protection. The simplification is mainly aimed at situations where there is non-payment, repeated non-compliance, or a judicial decision that determines the eviction of the property.

(Top▲)The State may ensure rents during the process

The reform provides that the State may ensure the payment of rents during the Special Eviction Procedure and when there is a request for legal aid that suspends or delays the process.

The intention is to prevent the owner from continuing to accumulate losses while waiting for a decision or the conclusion of legal procedures.

The specific conditions of this mechanism will still need to be known, namely the point at which the payment is made, the amount covered, and how the State can later recover the amounts owed.

(Top▲)What happens to contracts prior to 1990?

Old rents are one of the most sensitive issues of this reform. Portugal still has about 150,000 contracts prior to 1990, many of them with rents significantly lower than current market values. It is known that a significant part of these contracts is occupied by elderly people or households with low incomes.

The Government sought, with this package, to create a differentiated solution based on the tenant's age and income:

Tenants under 65 years old When the tenant is under 65 years old and the household's annual income is less than 64,400 euros, the rent should remain protected for a period of 5 years. If the annual income exceeds this amount, the rent may be updated up to the limit corresponding to 1/15 of the VPT, Property Tax Value, of the property. For example, in a property with a VPT of 180,000 euros, the annual limit would correspond to 12,000 euros, i.e., a monthly rent of 1,000 euros.

Tenants aged 65 or over When the tenant is aged 65 or over, the contract should not transition to the New Urban Lease Regime. However, if the household's annual income exceeds 64,400 euros, the rent may be updated up to the limit of 1/15 of the Property Tax Value.

Tenants with disabilities Tenants with a disability degree equal to or greater than 60% should benefit from protection similar to that provided for people aged 65 or over. In old contracts covered by these situations of greater vulnerability, rent updates may only occur when the household's annual income exceeds the defined limit.

These rules still depend on the final wording of the legislation and the transitional norms that may be approved.

(Top▲)Major renovations and relocation

The Government also intends to simplify the termination of contracts when the property requires major renovation.

In old contracts where the tenant is over 65 years old or has a disability equal to or greater than 60%, the owner will still be obliged to ensure relocation under similar conditions.

In other cases, when there is no agreement between the parties, compensation should be paid.

The goal is to allow the recovery of degraded properties without removing protection from the most vulnerable tenants.

(Top▲)Limitation of the transmission of old contracts

A limitation on the transmission of contracts prior to 1990 is also planned.

Over the years, some of these contracts have been passed on to relatives of the original tenant, extending for several generations rents that are far from current values.

The reform aims to restrict these transmissions, although the specific cases and exceptions can only be assessed after the final version of the law is known.

(Top▲)Emergency Housing Fund

This reform is accompanied by the creation of the Emergency Housing Fund, which will be managed by the IHRU, Institute for Housing and Urban Rehabilitation, in coordination with Social Security and other public entities.

The Emergency Housing Fund is intended to support people and families who lose their housing and do not have an immediate solution, including victims of domestic violence.

The support may take the form of a direct and non-refundable payment for accommodation or relocation expenses, temporary or permanent.

According to the information presented, the decision to provide assistance should be automatic and communicated within the maximum period of 10 days after the request is submitted.

There was also mention of support for accommodation or relocation expenses up to a limit of 2,300 € per month, for a maximum period of 6 consecutive months. The access criteria, the amounts actually paid, and the necessary documents will have to be confirmed in the published decree.

(Top▲)What changes for property owners?

For property owners, the reform represents a recovery of some contractual freedom. There will be more room to negotiate the rent of a new contract, the deposits, the advance rents, and the duration of the contractual relationship.

The reduction in the time needed to react to non-compliance and the simplification of eviction procedures aim to reduce the risk of putting a house on the market.

But greater freedom also implies greater responsibility. Clauses will have to be clear, communication deadlines must be respected, and the amounts withheld from the deposit will have to be duly justified.

(Top▲)And for tenants?

For tenants, initial access to a house may become a financial challenge. Paying 3 advance rents, plus a high deposit, may represent an added difficulty for many families, even when they have sufficient income to cover the monthly rent.

There will also be less tolerance for repeated delays and greater ease for the owner to prevent automatic renewal.

On the other hand, current contracts cannot undergo free and unilateral increases. The rent will continue to be updated according to what is provided in the contract or through the legally defined coefficient.

The most vulnerable tenants, particularly the elderly, people with disabilities, and families in housing emergency situations, should continue to benefit from special protection mechanisms.

(Top▲)Will these measures lower rents?

It is still too early to tell. Rents do not decrease just because a law changes.

The price depends, above all, on the number of houses available, demand, location, family incomes, and costs borne by the owners.

The Government believes that more predictable rules and faster processes will convince more owners to rent out houses that are currently vacant. I also think so. If the supply increases significantly, there may be greater price moderation. But this effect will not be immediate and is unlikely to be the same across the country.

In areas like Lisbon, Oeiras, and Cascais, where demand remains high and available land is limited, the pressure on rents is expected to persist, at most stabilize, while there is no housing supply compatible with the needs.

(Top▲)When will the new rules come into effect?

The measures approved by the Council of Ministers on July 9, 2026, are not yet in effect.

• The rental regime reform will have to go to the Assembly of the Republic, where it will be discussed and voted on. During this process, parties may present amendment proposals, and the wording initially approved by the Government may undergo modifications.
• After parliamentary approval, the decree will have to be sent for promulgation by the President of the Republic, published in the Official Gazette, and come into effect on a date to be defined.
• The creation of the Emergency Housing Fund may follow its own legislative path, depending on the nature of the approved decree. Also in this case, the respective publication will be necessary for the support to begin to be granted.
• Some measures may still depend on additional regulation, including the definition of necessary documents, application procedures, eligibility criteria, and responsible entities.

As we can see, there are many conditions until the definitive decrees are published, and until then, the current rules continue to apply. Landlords and tenants should not change contracts or make decisions based solely on announcements made after the Council of Ministers.

(Top▲)A reform seeking to restore confidence

In my opinion, there is a principle in this reform that makes sense:

Social protection must be ensured by the State and cannot depend indefinitely on the financial capacity of a private owner.

It is also understandable that a landlord wants to recover the property when there are several months of overdue rents or repeated contract non-compliance. But balance will be crucial.

A deposit without a reasonable limit may deter families who would have the capacity to meet the monthly rent. A faster eviction process will only be fair if there is a public response, through Social Security, equally quick for those who have lost income for reasons beyond their control.

The true outcome of this reform will thus depend on 3 factors:

• whether more owners put houses on the market;
• whether judicial procedures start functioning more quickly;
• whether the Emergency Housing Fund can respond to families before they are left without a roof.

For now, we know the direction of the reform. The definitive assessment will only be possible when the legislation is published and starts being applied in real life.

(Top▲)Frequently asked questions about the new rental rules

PS: This article is for informational purposes only and is based on the measures presented by the Government after the Council of Ministers on July 9, 2026. The final wording, entry into force dates, and applicable rules may be altered by the political and legislative process.