What could change?

One-year contracts may no longer guarantee three years of renewal

One of the most impactful changes for those renting a house is in the rules for contract renewal.

The proposal maintains the minimum duration of one year and the maximum of 30 years, but eliminates the rule that, when nothing is stipulated in the contract, the renewal must have a minimum duration of three years.

In practice, a contract signed for one year could be renewed for periods of only one year.

The proposal also alters the rules regarding opposition to renewal by the landlord. Currently, although the minimum duration of contracts is, as a rule, one year, there is a protection that prevents the landlord from opposing the first renewal before three years have elapsed since the signing of the contract.

If the proposal is approved as is, the landlord may oppose the renewal at the end of the first contract, provided that the applicable notice periods are met.


Evictions can proceed after two months of non-payment of rent

Another key change in the reform concerns non-payment of rent.

The government proposes reducing the period of rent arrears required to trigger eviction from three to two months.

The proposal also aims to make the processes faster, eliminating unnecessary administrative steps and notifications, and avoiding duplication of judicial decisions related to eviction and rent payments.

The government's stated objective is to accelerate the recovery of properties and, in this way, contribute to increasing the supply available in the rental market.


What happens to so-called "old leases"?

The proposal also addresses one of the most sensitive issues in the lease regime: contracts signed before 1990.

One of the changes concerns the transfer of the contract upon the death of the so-called "original tenant," that is, the person who originally entered into the contract.

The Government wants to clarify the rules for transferring leases and foresees that, in certain cases, when a lease is transferred upon death to a spouse or partner under 65 years of age, it will transition to the NRAU (New Urban Lease Regime).

In the absence of an agreement between the parties, the lease will be considered to be for a fixed term of five years, automatically renewing itself for successive periods of equal duration, unless otherwise stipulated.

However, there are safeguards. The transition to the NRAU does not apply when the new holder is over 65 years of age or has a proven disability of 60% or more.

The proposal also requires the transferee to prove that they actually resided in the property and establishes specific rules for de facto unions and other family members who may be entitled to the transfer.

Old rents can be updated.

The changes don't stop with the transfer of the lease. For tenants under 65 years of age with an annual income below €64,400, the proposal stipulates that the rent will be maintained for five years, although the contract will be transferred to the NRAU (New Urban Lease Regime).

When the rent exceeds this amount, the rent may be updated to 1/15 of the Taxable Asset Value (VPT) of the property.

For tenants over 65 years of age, the contract does not transition to the NRAU. However, if the annual income of the household exceeds €64,400, the proposal also provides for the possibility of updating the rent to 1/15 of the VPT.


Right of first refusal will now require three years in the property.

The tenant's right of first refusal to purchase the property may also change.

Currently, the tenant can exercise this right when the conditions stipulated by law are met. The proposal aims to extend the minimum lease term required for the right of first refusal to apply.

According to the published proposal, the tenant will have to live in the house for at least three years, one year more than the period currently stipulated in the Civil Code.

The Government also wants to change some situations regarding the joint sale of properties and eliminate certain types of right of first refusal that have generated conflict.


What if the tenant dies?

The transfer of the contract upon death is another point that undergoes changes.

The proposal restricts and clarifies who can remain in the house and succeed to the tenant's position. Among other changes, proof of residence in the property will be required, and, when a de facto union is involved, proof of this situation through a certificate issued by the parish council.

The objective is also to replace the generic reference to people living in a "common economy" with a more systematic enumeration of family members who can benefit from the transfer.


Tourist rentals limited to 90 days

The proposal also foresees changes in rentals for tourist purposes.

The new system will allow for the signing of multiple contracts, but only for a maximum period of 90 days per year.
Government wants to attract more rental housing
The reform is presented by the Government as a response to the housing crisis and as a way to increase the supply available on the market.

Among the objectives is also the creation of better conditions for investment in housing intended for rent. The Portuguese Association of Real Estate Developers and Investors (APPII) has already expressed support for the proposal, considering it an important step to increase supply and to create conditions for a true Build-to-Rent market, that is, new construction specifically intended for rent.

For owners, the reform may mean greater predictability and faster mechanisms in situations of default. For tenants, some of the changes represent a reduction in currently existing guarantees, especially with regard to the effective duration of contracts, renewal and transfer of rent.

For now, however, nothing changes. The proposal will still have to go through Parliament and may be amended during the legislative process before becoming law.

News: Casa Yes
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