Proposed rental law reform sparks political row over tenant protections

Portugal’s centre-right government has unveiled plans for a sweeping overhaul of the country’s urban rental laws, arguing that the reforms will restore confidence among landlords and encourage more homes onto the rental market. But the proposals have already triggered fierce opposition, with left-wing parties warning they would weaken tenants’ rights, drive up housing costs, and make evictions significantly easier.

The reform, approved in outline by the Council of Ministers last Thursday but yet to be debated in parliament, would amend the New Urban Rental Regime (NRAU) and reverse several tenant protections introduced in recent years.

The government says the measures are designed to strike a better balance between landlords and tenants while tackling Portugal’s chronic housing shortage by increasing the supply of rental properties.

Among the most significant proposals is the removal of the current 2% cap on rents for new tenancy agreements. Instead, rents would be freely negotiated between landlords and tenants.

The government also wants to accelerate the transition of pre-1990 rental contracts to the modern rental regime. Elderly tenants aged over 65 with annual household incomes below €64,400 would retain their existing rents – but those earning above that threshold could see rents updated to one-fifteenth of the property’s taxable value.

Larger upfront payments

The proposed legislation would also allow landlords to demand up to three months’ rent in advance, instead of the current limit of two. (This facility is not to be confused with a ‘deposit’, which landlords also tend to levy on any incoming tenants).

Regarding this deposit, the legal ceiling would be removed altogether – allowing landlords to decide how much they require before signing a lease (ie they could charge more than a months’ rent, on top of the three months’ entry already being factored into the equation).

Consumer rights organisation DECO PROteste instantly criticised the proposals, arguing the existing cap was introduced specifically to prevent excessive financial demands on tenants. DECO has suggested rental insurance schemes would provide a fairer way of protecting both landlords and renters.

Another key change would remove the current rule preventing landlords from blocking the first automatic renewal of a lease during its first three years.

Under the government’s proposal, landlords would be able to refuse automatic renewal at any point, provided they give the required notice.

Fixed-term contracts would continue to run for between one and 30 years.

Faster evictions

Perhaps the most controversial element concerns evictions for unpaid rent.

At present, landlords can begin eviction proceedings after three months of missed payments. The government wants to reduce that threshold to two months.

It also proposes tightening rules covering repeated late payments. Under current legislation, tenants face eviction if rent is paid more than eight days late on more than four occasions within a 12-month period. The new rules would lower that threshold to three late payments in one year or four within 18 months.

The deadline for landlords to exercise their right to terminate a tenancy after a breach would increase from three to six months.

To soften the impact on vulnerable households, the government also plans to establish a Housing Emergency Fund, managed by the Institute for Housing and Urban Rehabilitation (IHRU), to assist tenants evicted for non-payment and victims of domestic violence.

The fund would be available to households earning less than three times Portugal’s national minimum wage—€2,760 per month in 2026—and could provide housing support of up to €537.13 a month for six months, alongside other rental assistance programmes.

The measures form part of a broader housing strategy that also includes tax incentives for landlords, capital gains tax exemptions linked to affordable rentals and support for first-time homebuyers aged under 35.

Opposition warns of ‘eviction pandemic’

The reforms have predictably drawn sharp criticism from opposition parties.

The left-wing Bloco de Esquerda(BE) has accused the government of showing “total cruelty” by making it easier to evict tenants over relatively minor payment delays.

BE MP Fabian Figueiredo believes the proposals would “open the door to a pandemic of evictions” at a time when many Portuguese households already struggle to pay rent because of rising living costs and delayed salary payments.

“Someone who pays their rent should not be evicted,” he said, arguing that occasional delays should not be treated in the same way as persistent non-payment.

Environmentalist party LIVRE described the reforms as “a step backwards in tenants’ rights”, warning they would strengthen landlords’ bargaining power while increasing financial barriers for people seeking rented accommodation.

LIVRE has also questioned whether removing restrictions on deposits and advance payments would do anything to curb rapidly rising rents – arguing instead that the measures would create greater insecurity for tenants.

As for the proposed Housing Emergency Fund, LIVRE suggests it risks becoming “a sticking plaster for an eviction policy” rather than preventing people from losing their homes.

The opposition Socialist Party (PS) has also condemned most of the package, arguing that abolishing the 2% limit on new rental contracts would fuel further price increases.

PS housing spokesman André Moz Caldas said removing what he described as “the only mechanism moderating new contract prices” would effectively turn access to rented housing into “an auction”.

He also criticised the removal of legal limits on deposits and advance payments, saying they would place an even greater financial burden on prospective tenants.

However, the Socialists stopped short of rejecting the entire package.

Moz Caldas acknowledged that speeding up eviction procedures where tenants repeatedly fail to pay rent addressed a genuine problem for landlords, and thus could help improve confidence in the rental market.

The government has justified the reforms as necessary to restore “balance and contractual freedom” between landlords and tenants – insisting greater legal certainty will persuade more property owners to place homes on the rental market.

The legislation has yet to reach parliament and is unlikely to be debated before lawmakers return from their summer recess in September – meaning the proposals could still undergo significant changes before becoming law.

As this text went up online it was still not clear what position right-wing CHEGA has taken over these proposals.

Source material: Lusa/ SIC Notícias/ Expresso/ Executive Digest