Portugal has approved limitations for rental contract increases

What has happened? Last week the Portuguese Parliament approved restrictions on rent increases under the Mais Habitaçᾶo (More Housing) program to prevent landlords raising the prices of new contracts for existing rental properties. 

Details. The initial rental value for new leases for properties that have been on the market for the past five years will not be able to exceed the amount specified in the previous contract.

But there are clarifications:

• The effect of inflation has been taken into account and an increase of 2% may be applied to new rental contracts, in line with inflation.
• For leases that have not been renewed in the past five years, the automatic update coefficients of the three previous years may be added. In 2023, this value was 5.43%.
• This measure only applies to contracts that have been rented for the last five years and there is currently no limit in place for leases of properties entering the residential rental market.
• The value of rental contracts for properties that have undergone necessary restoration or refurbishment may increase by 15%, to cover these costs and to ensure the new lease sits in line with the property´s market rental value.

What else? In addition to restrictions on rent increases, the state has approved a number of measures under the Mais Habitaço program. They included a suspension of new local accommodation outside the interior of the country, an end to new golden visas through housing investment and an exemption from capital gains on houses sold to the state.

We remind you that back in the spring of 2023, the government of the country published the final version of the “More Housing” law, which, among other things, provides for changes to the Golden Visa program. However, the final decision has not yet been made, and this is only an intermediate stage of voting in parliament.

Source: The Portugal News

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