Rental Contract Increases Portugal: How the Mais Habitaçᾶo Programme Shapes the Market
“Rental Contract Increases Portugal” is the current phrase buzzing among landlords and tenants alike. As Portugal battles a soaring real estate market, the government has taken a decisive step to curtail rapid increases in rental prices. As part of the Mais Habitaçᾶo (more housing) programme, the parliament, on July 6, approved measures limiting the rise in rent of existing rental properties. The effects of this ruling could significantly impact the market dynamics of Portugal’s property landscape.
New Limits for Certain Rental Contracts
The impact of this policy is not uniform across the board. It primarily affects rental properties that have been in the market for the past five years. As a landlord, if you’re signing a new contract for a house that falls under this category, the initial rent value cannot exceed the last rent stipulated in the previous contract.
To consider the effect of inflation, the government permits a nominal increase of 2% to new rental contracts. However, if a rental contract has not been updated in the last five years, landlords can apply the automatic update coefficients of the preceding three years, which stands at 5.43% for 2023.
Portugal’s ‘Necessary’ Move
The move to control “Rental Contract Increases Portugal” is seen as necessary by Prime Minister António Costa. Recognising the restrictive nature of this measure, Costa believes it’s a reasonable step towards averting a system that could render housing unaffordable for its residents. The current rental market level, he notes, is well above what families can comfortably afford.
No Limit for New Entries
The restriction does not apply to all rental properties. If you’re leasing a property that is entering the residential rental market, there is no limit to the rental price you can charge.
The parliament approved the measure with favourable votes from the Socialist Party (PS). The Left Bloc (BE) and the Portuguese Communist Party (PCP) abstained, while the Social Democratic Party (PSD), Chega (CH), and the Liberal Initiative (IL) opposed it.
A Loophole for Refurbished Properties
Landlords of properties that have undergone ‘deep refurbishment or restoration works’—duly certified by the City Council—have some leeway. They can increase the value of rental contracts by 15%, relative to the corresponding expenses borne by them. This allowance aims to ensure these properties’ rental value aligns with the market.
Variety of Measures Approved
The limit on rental contract increases was among several measures greenlighted by the parliament on Thursday. Other approved policies under the Mais Habitaçᾶo programme include suspending new local accommodations outside the country’s interior, ending new golden visas via housing investment, and exempting capital gains on houses sold to the state.
In conclusion, the focus on “Rental Contract Increases Portugal” underscores the government’s commitment to creating a balanced and sustainable housing market. While the effects of these new measures remain to be seen, the balance between landlords’ interests and affordable housing seems to be the path Portugal is charting.
FAQ
What is the ‘Mais Habitaçᾶo’ Programme?
‘Mais Habitaçᾶo’ is a programme initiated by the Portuguese government aimed at creating a balanced and sustainable housing market. It involves measures like limiting rental contract increases, suspending new local accommodations outside the country’s interior, and ending new golden visas via housing investment.
What is the limit on rental contract increases in Portugal?
Under the Mais Habitaçᾶo programme, rental properties that have been on the market for the past five years can’t increase their initial rent value beyond the last rent value of the previous contract. However, an inflation-related increase of 2% is allowed.
Do the limitations apply to new properties entering the rental market?
No, the limitations only apply to properties that have been rented for the last five years. New properties entering the rental market do not have a limit on their lease prices.
Can landlords increase rents after refurbishing the properties?
Yes, if a property has undergone “deep refurbishment or restoration works”, landlords can increase the rental contract value by 15%, relative to the expenses they’ve incurred.
What’s the impact of the rental contract limit measures?
The measures aim to stop Portugal from creating a system that makes it impossible for residents to afford rent. They are seen as a necessary move to balance landlords’ interests with affordable housing.