Portugal rental-law reform 2026: what it means for owners and tenants

What Parliament approved on 30 September

The Government's Bill 103/XVII/1 passed in principle, with Chega abstaining. It seeks legislative authorisation to change rental law. Detailed scrutiny and subsequent legislation still matter; a first-reading vote does not itself amend a lease.

The date that matters to a contract is the commencement date of the applicable final legislation, together with its transitional provisions. Until then, owners and tenants should use the rules currently in force. This article separates the initial proposal from the PSD-Chega agreement and our own market analysis.

The initial proposal: rent, deposits and arrears

The Government's July presentation and the proposal describe greater contractual freedom and faster procedures. These are proposed changes, subject to the final text:

• New leases: remove the rule linking the initial rent of certain new residential contracts to the previous rent, commonly described as the 2% limit.
• Advance rent: increase the permitted agreed period from two to three months. Advance rent and a security deposit are different payments.
• Deposits: remove the specific ceiling of two rents. This is separate from the proposed three-month advance-rent limit.
• Arrears: reduce the threshold in the relevant non-payment ground from three months to two, alongside procedural changes. This would not guarantee recovery of the property within two months.

Why the PSD-Chega agreement matters

The agreement reported by RTP/Lusa commits to limiting advances and deposits, protecting vulnerable older tenants with pre-1990 contracts and compensation for landlords, strengthening the housing-emergency response, and distinguishing deliberate repeated default from genuine inability to pay.

These are commitments for detailed scrutiny, not a settled numerical deposit cap or a guaranteed eviction timetable. For a business plan, the original proposal and the negotiated final rules cannot be treated as interchangeable.

Does the reform allow an unlimited increase in an existing rent?

The proposed repeal concerns the initial rent of certain new contracts under article 34 of Law 56/2023. That is different from updating rent within an existing lease. The Government expressly distinguishes the two.

There is no basis in this vote for assuming that every current rent can immediately be reset to an advertised market price. Nor was the 2% mechanism a universal rule for every rental situation. Check which contract, rule and exceptions actually apply.

IMOJA's analysis: more security may bring supply, but not instantly

An owner who expects lengthy non-payment and an uncertain return of the home may keep it empty or choose to sell. A credible reduction in that risk could change the decision for some owners. That is an economic mechanism, not a measured result of this reform.

The effect depends on working procedures, predictable rules and a sustainable rent. Homes needing major repairs, unresolved ownership or substantial investment will not become rental supply simply because contractual rules change. A higher asking rent also does not create a tenant able to pay it.

Our view is that implementation and the number of genuinely available homes matter more than the headline. More freedom alone cannot establish that rents will fall, or that every property's sale value will rise.

Tenants: the monthly rent is only part of the affordability test

A larger deposit is not the same as higher monthly rent, but it ties up cash. That can exclude a household able to meet the monthly payment but unable to fund a large amount at signing. The mechanism concerns available savings, regardless of nationality.

Illustration under the current article 1076 limits: at a monthly rent of €1,200, two advance rents total €2,400 and a deposit of two rents totals €2,400. These two items together require €4,800. This is an example of agreed payments, not a mandatory package or a calculation of every moving cost.

If a future agreed advance increased from two rents to three at the same rent, that item alone would require another €1,200. The future deposit rule remains subject to the final legislation. Obtain a written breakdown of rent, advances, deposit and refund conditions before comparing offers.

Owners and buyers: assess net income, not the best-case rent

Illustrative scenario, before income tax and financing: a €250,000 property advertised at €1,000 a month suggests €12,000 a year, or 4.8% of the purchase price. If only 11 months are collected and annual owner costs are assumed to be €3,000, the remaining amount is €8,000, or 3.2% of that price.

The €3,000 is an assumption, not an estimate for your property. Acquisition costs are also excluded from this simplified denominator. A real comparison must include the property's actual costs, tax treatment, funding, repairs, vacancy and collection risk. Faster procedures would not remove those expenses or insure rental income.

Rent or sell: compare two realistic outcomes

Compare the annual income left after actual costs with the proceeds left after sale costs, debt repayment and applicable tax. Also consider how long you want to hold the property, your need for cash and your capacity to manage a tenancy. A deposit is a guarantee to account for, not additional rental profit.

If the home is already let, have the lease, occupation, rent, arrears and relevant rights checked before setting a sale timetable. A sale is not, by itself, a shortcut to vacant possession. A buyer's assessment can differ substantially between a home available for occupation and one sold with a tenancy.

For sellers in Lisbon, Mafra, Ericeira or Torres Vedras, local competition and the property's condition still matter. Do not raise the asking price solely because a national reform has advanced in Parliament.

What to monitor before relying on new rules

Watch the final terms on deposits and advances, commencement and transition, treatment of older contracts, and the practical operation of default procedures. For market effects, look for newly available homes and completed rental contracts; advertised rents alone do not prove improved supply or affordability.

If you are considering a sale, IMOJA can help organise the property's information and compare selling options. The reform is useful context for that decision; the contract and the property's actual position require their own assessment.