Portugal Rental Laws: Pro-landlord, Neutral or Pro-tenant?
Portugal's landlord and tenant laws are judged by the Global Property Guide to be Pro-Tenant between landlord and tenant. Portuguese rental law is considered pro-tenant for several key reasons, stemming from a long-standing tradition of tenant protection and a desire to foster a fair and balanced housing market. Key factors include strong security of tenure, which ensures tenants' right to remain in their homes, regulated rent increases to prevent excessive hikes, and limited grounds for eviction, which protect tenants from arbitrary displacement. These and other provisions work together to create a system that prioritizes tenant stability and fairness in the rental market.
Rents: Can landlord and tenant freely agree rents in Portugal?
The amount of the rent can usually be freely agreed between the parties, with the exception of low-cost housing (“conditioned rent” and “supported rent”).
Rent reviews can also be freely agreed (although they must take place annually), and, with careful drafting, cost-of-living rent increases and suchlike can be agreed (although in some types of non-residential lease, such freedom depends on the existence of a first term of five years for the lease). If no specific agreement exists, the rent may be adjusted by the landlord annually according to scales periodically established by law.
Deposits
In Portugal, it is customary for landlords to request a rental deposit, typically equivalent to two months' rent. However, unlike some other European countries, there are no specific regulations regarding the maximum duration for which the landlord can retain the deposit.
While a two-month rent deposit is common, it doesn't always eliminate the need for a guarantor, or fiador. This guarantor must be a Portuguese citizen, which can be a challenge if you don’t have close personal connections in Portugal. The guarantor legally assumes responsibility for the rent in the event of tenant default.
If securing a guarantor proves difficult, there is an alternative. Landlords may request advance rent payments, usually covering a period of 6 to 12 months.
What rights do landlords and tenants have in Portugal, especially as to duration of contract and eviction?
A rental contract, or contrato de arrendamento in Portuguese, is a formal agreement that outlines the terms of your tenancy and ensures the rights of both tenants and landlords are protected.
Documents Required for a Rental Contract:
- Your Tax Identification Number (NIF)
- Identification documents for both landlords and tenants (including date of birth, nationality, and marital status)
- The address of the property
- The property's license number and issue date
- Rent amount and payment due dates
- Contract start and end dates
Most rental agreements in Portugal allow you to terminate the contract after completing one-third of its duration. However, if more than a year remains on your contract, you must give a notice period of 120 days. For contracts with less than a year remaining, a 60-day notice period is typically sufficient.
How effective is the Portugal legal system?
The legal system in Portugal is generally effective in handling eviction cases, but it is designed to offer strong protections for tenants, which can make the process somewhat lengthy and formal for landlords.
Legislation
In Portugal, tenant and landlord relations are primarily regulated by the Civil Code and specific laws related to housing and rental agreements. Key regulations include:
- The Civil Code (Código Civil): This serves as the foundational legal framework for all civil matters in Portugal, including rental agreements. It establishes the basic rights and obligations of both landlords and tenants, covering areas such as lease duration, rent payment, property maintenance, and termination conditions.
- The New Urban Lease Act (NRAU - Novo Regime do Arrendamento Urbano): This law regulates urban rental contracts and governs the rights and responsibilities of both tenants and landlords. It was introduced to modernize and simplify the rental process. It includes rules on the duration of rental contracts, rent increases, tenant protections, and the termination of leases. The NRAU specifically applies to leases for urban properties, which are the most common types of rental agreements in Portugal.
- The Housing and Rent Law (Lei das Rendas): This law regulates rental prices, rental contracts, and eviction procedures. It includes provisions on rent control, guidelines for rent increases, and the procedures landlords must follow to legally increase rent or evict tenants.
Brief History: Recent changes in Portugal's landlord and tenant law
The urban lease has been regulated in Portugal for several centuries. In the last 140 years, it has been subject to hundreds of laws and regulations, mostly as a result of political changes during the 20th century. The 1966 Civil Code (Código Civil) consolidated the urban lease regulations to date, including the 1948 law suspending rent increases in Portugal’s two main cities, Lisbon and Oporto.
The left-wing revolution of 1974 and the turbulent 1980s ushered in a highly pro-tenant urban lease regime. There were severe restrictions on the landlord’s termination rights, and rent increases were forbidden or very much limited.
After 1990, RAU and its amendments introduced some changes (e.g., in respect of fixed-term leases). But NRAU and its complementary legislation is expected to restore balance between landlord and tenants’ rights, restore competitiveness to the urban lease market, and allow the recovery of property from tenants. This will be a major turning point in Portuguese urban lease history, if NRAU is not smothered at birth.