Portugal's Government Advances a Rental-Law Overhaul, Cutting the Eviction Threshold to Two Months and Unfreezing Old Rents

The Portuguese Government has approved the broadest rewrite of the country's rental rules in years, a package that would make it faster to evict tenants who fall behind on rent and begin dismantling the decades-old freeze on the oldest, cheapest leases. The measures were signed off by the Conselho de Ministros (Council of Ministers) on 9 July and now head to the Assembleia da República (Parliament) as a proposta de lei (draft bill) — so nothing changes overnight, but the direction is set.

Ministers frame it as an update to the Novo Regime do Arrendamento Urbano (New Urban Lease Regime, or NRAU), the framework that governs residential tenancies. For the hundreds of thousands of residents who rent — including many foreign residents — the two headline changes are what happens when rent goes unpaid, and what happens to the small pool of very old, frozen-rent contracts.

Evictions: the arrears trigger drops to two months

Under the current rules, a landlord can move to end a contract once a tenant is three months behind on rent. The bill cuts that to two months. It also targets chronic late payers: a contract can be terminated where the tenant is more than eight days late more than three times within a 12-month period, or more than four times within 18 months, whether or not those lapses are consecutive.

Alongside the lower threshold, the Government wants the eviction process itself to move faster. The plan is to strip out steps it considers redundant and to fold the decision on repossessing the property and the decision on unpaid rent into a single proceeding, rather than running them separately. The stated aim is to shorten a process landlords have long complained can drag on for a year or more.

The freeze on old rents begins to thaw

Portugal still has a residual stock of pre-1990 tenancies whose rents were frozen for decades and, in recent years, allowed to rise only with inflation. The bill sets out to phase these out, but with means-tested protections built around a household-income line of €64,400 a year and the tenant's age:

• Tenant under 65, household income below €64,400: the contract moves onto the NRAU, but the current rent stays frozen for a further five years, after which a social housing response is prioritised.
• Tenant under 65, income above €64,400: the contract moves onto the NRAU and the rent can be updated to one-fifteenth of the property's Valor Patrimonial Tributário (Taxable Property Value, or VPT) — the tax value the Finance authorities assign to the home.
• Tenant aged 65 or over, income below €64,400: the contract does not move onto the NRAU; the existing protection and rent level are preserved.
• Tenant aged 65 or over, income above €64,400: no transition either, but the rent may rise up to one-fifteenth of the VPT.

In short, the oldest rents would no longer be pinned to inflation alone: for higher-income tenants they could be re-based on the home's tax value, while lower-income and older tenants keep a cushion. To catch those who cannot absorb an increase, the Government says it will create a social rent subsidy (subsídio social de renda) for tenants who prove they lack the means to pay the updated figure, plus a public rent-payment guarantee that steps in at certain stages of a dispute.

A separate change for new leases

The package also brings forward, by three years, the end of the cap on how much rents on new contracts can rise. That ceiling had been due to run until the end of 2029; under the bill, new-lease rents would instead be freely agreed between landlord and tenant sooner. It lands against a market where new-lease rents have been climbing steeply and the average home now costs a record €262,839.

An IMI refund for old-rent landlords

Separately, the Autoridade Tributária (Tax Authority) has admitted "some anomalies" in charging IMI (the municipal property tax) for 2025 to landlords whose pre-NRAU frozen leases are still active — contracts that are meant to be exempt from IMI and IRS for their duration under Article 46-A of the Estatuto dos Benefícios Fiscais (Tax Benefits Statute). Where the tax was already paid in full, it will be refunded; where it is being paid in instalments, the difference will be deducted from later payments. (For how IMI works more generally, see our guide to the IMI property tax.)

Landlords and the left both unhappy

The reform pleased few. The Associação Lisbonense de Proprietários (Lisbon Landlords' Association) dismissed it as "timid, partial and deceptive," arguing that "calling this a reform is deceiving the country" and that the frozen old rents remain "the real elephant in the room" of Portuguese housing. It also attacked the €64,400 income line, saying "€64,400 a year is not economic hardship."

From the opposite direction, the Partido Comunista Português (Portuguese Communist Party, or PCP) accused the Government of "pushing tenants onto the street," with parliamentary leader Paula Santos arguing the changes make eviction easier and treat housing as "a commodity." With the bill now before Parliament, its final shape — and the fate of the two-month arrears rule and the old-rent thresholds — will be settled in the coming legislative debate.

What This Means for You

• If you rent your home: should the bill pass as drafted, falling two months behind on rent — rather than three — could trigger the end of your contract, and repeated late payments could too. Nothing changes yet; this is a bill, not a law in force.
• If you hold a very old, frozen-rent lease: your position would depend on your age and household income against the €64,400 line. Under-65s above that line face re-basing to the property's tax value; over-65s and lower-income tenants keep more protection, and a new subsidy is promised for those who cannot pay.
• If you are a landlord: a faster, consolidated eviction route and a nearer end to the new-lease rent cap are on the table — and if you hold an old frozen lease, watch for the promised IMI refund for 2025.
• If you are signing a lease now: our practical guide to signing a rental lease in Portugal walks through the deposit, guarantor, stamp duty and electronic rent receipts.

None of this is settled until Parliament votes, and the Government has not put a date on when the new rules would take effect. But after years of talk about "unfreezing" Portugal's oldest rents and speeding up its slowest evictions, the outline of how it would actually be done is now on the table.