How Portugal is encouraging landlords to become landlords?

Hello, Portugal also has a housing crisis, apparently the stats. say on average people are paying 82% of their incomes in rent!

Please see below extracts from Idealist publication, summarising how the government is helping landlords to enter the rental market. It’s almost, whatever recent governments have done here, Portugal is doing the opposite!

Renting a home in Portugal: what changes for landlords and tenants?
The Portuguese government is seeking to increase the supply of homes available on the market in response to the housing crisis. Building more housing is one strategy, though not the only one. Reviving the rental market also remains on the agenda, and the government approved a proposal to reform the urban rental system at the Council of Ministers meeting of 9 July 2026.

The announced measures focus mainly on negotiating agreements, responding to breaches of contract.

The changes are set out below, based on an article prepared for Idealista/news by Manuel César Machado and Diana Longarito, associate lawyers at Dower Law Firm.

1 – Stronger mechanisms for dealing with breaches of contract
Changes to the rules governing the termination of rental agreements, make it easier to end a contract when rent payments are overdue.
A contract could therefore be terminated once rent arrears have continued for two months, rather than the current three.
Delays of more than eight days could also justify termination if they occur:
• a) more than three times, consecutively or intermittently, over 12 months; or
• b) more than four times over 18 months.

The period within which a landlord may exercise the right to terminate in these circumstances is also expected to increase from three to six months.
Under the current rules, landlords who give tenants more time to settle arrears in good faith may lose the right to terminate the agreement if they do not exercise it within three months.

The proposal also extends this period from three to six months.

Greater freedom to increase rents
At present, the law limits the starting rent for new agreements where there was a previous contract for the same property, restricting any increase to 2% above the last rent charged. The proposal removes this restriction, giving the parties more freedom to set the initial rent.

This change would not allow landlords to raise rent freely during an existing agreement. In those cases, the regime agreed by the parties remains in force, or, where no specific agreement exists, the annual statutory adjustment coefficient applies.

Greater freedom to set deposits and advance payments

For future contracts, it could also be agreed that:
• a) up to three months’ rent may be paid in advance, instead of the current limit of two months;
• b) a deposit may be set without the current cap of two months’ rent.
This change also gives the parties more freedom, while giving landlords greater protection by allowing them to request more guarantees from tenants.

Greater freedom to oppose renewal

The proposal also states that a landlord may oppose the first automatic renewal of an agreement once the initial term ends, provided they give the legally required notice.

Under the current system, opposition to the first renewal only takes effect three years after the contract was signed. The proposed change removes this difference between landlords and tenants, meaning both parties would be subject to the same rules.

Protection in housing emergencies

Alongside this, a decree-law has been approved creating the Housing Emergency Fund. It is intended to support people and households who lose their home because of financial hardship, or who face other particularly vulnerable circumstances.
The assistance will be non-repayable financial support.

So these are the main proposals for new tenancies.

What do Property118 readers think?

Best wishes,

M