On 9 July 2026, the Portuguese Government approved a comprehensive package of reforms to the country’s rental market as part of its “Construir Portugal” (Building Portugal) housing strategy.
The reform seeks to address one of Portugal’s most pressing challenges: increasing housing supply while restoring confidence among property owners. Although the measures have been approved by the Council of Ministers, they have not yet become law. The proposed legislation must still be debated and approved by Parliament, where amendments remain possible.
Nevertheless, if enacted in its current form, the reform would represent one of the most significant changes to Portugal’s residential rental framework in recent years.
Key Changes Proposed
1. Faster Evictions for Non-Payment of Rent
One of the most notable changes concerns the termination of leases due to unpaid rent.
Under the proposal:
- Landlords will be able to begin termination proceedings after two months of unpaid rent, instead of the current three months.
- Repeated late payment of rent may also justify terminating a lease, even where the outstanding amounts are subsequently paid.
The Government argues that reducing the time required to recover possession of a property will increase legal certainty for landlords and encourage more owners to place vacant properties on the rental market.
2. End of Rent Controls for New Rental Agreements
The reform also proposes ending, three years earlier than previously planned, the mechanism that limited rent increases for new rental contracts.
Once the restriction is removed, rental values will once again be determined through free negotiation between landlords and tenants.
Supporters argue that market flexibility will stimulate investment and increase the supply of rental housing.
However, this proposal has become one of the reform’s most controversial aspects. Housing advocates and opposition parties warn that, in high-demand cities such as Lisbon, Porto and parts of the Algarve, rents could increase even further, making housing less accessible for many residents.
3. Greater Contractual Freedom
The proposed legislation would also provide parties with greater freedom when negotiating lease agreements.
Among the proposed changes are:
- Advance rent payments of up to three months (currently limited to two);
- Security deposits with no statutory maximum, allowing parties greater flexibility to negotiate guarantees;
- More flexibility regarding lease renewal provisions;
- Recognition of electronic communications between landlords and tenants where both parties agree.
The Government considers these measures necessary to modernise Portugal’s rental framework and align it more closely with practices seen in other European jurisdictions.
What Could Be the Impact on Portugal’s Rental Market?
If approved, the reform is likely to reshape the Portuguese rental market in several ways.
Increased Supply
One of the Government’s central objectives is to encourage property owners who have been reluctant to rent their properties—often due to concerns over lengthy eviction procedures and legal uncertainty—to return their homes to the long-term rental market.
If landlord confidence increases, Portugal could see a gradual expansion of available rental housing over the coming years.
Higher Market Rents
Greater contractual freedom may also lead to upward pressure on rental prices, particularly in areas where demand already significantly exceeds supply.
Lisbon, Porto, Cascais and several municipalities in the Algarve are expected to remain among the country’s most competitive rental markets. ERES RELOCATION SERVICES Amsterdam Barcelona Dusseldof Hamburg Lisbon Madrid Malaga Milan Paris Prague Porto www.eresrelocation.com
Whether increased supply will be sufficient to offset higher asking prices remains one of the key questions surrounding the reform.
More Selective Landlords
With greater flexibility over deposits and advance rent, landlords may become more selective when choosing tenants
Applicants with stable employment, demonstrable income and a positive rental history may find it easier to secure accommodation, while others—including younger tenants and newcomers to Portugal—could face increased competition.
What Does This Mean for Expats Moving to Portugal?
Portugal continues to be one of Europe’s most attractive destinations for international professionals, remote workers, retirees and entrepreneurs.
However, newcomers should be aware that the rental landscape may become increasingly competitive during the transition period.
Expats should consider:
- Beginning their housing search well in advance of relocation;
- Preparing documentation such as proof of income, employment contracts and tax returns;
- Expecting landlords to request larger security deposits or advance rent payments;
- Carefully reviewing lease terms before signing, particularly regarding renewal clauses, termination rights and guarantees.
For investors and expatriates purchasing property with the intention of renting it out, the reform could improve legal certainty and make long-term residential leasing a more attractive investment option.
The Reform Is Still Subject to Parliamentary Approval
Despite the Government’s approval, the legislative process is not yet complete.
The proposals must still be examined by Parliament, where political parties are expected to debate several aspects of the reform.
Amendments may be introduced before the legislation is finally approved and enters into force.
Given the political sensitivity surrounding housing affordability, further changes cannot be ruled out.
Looking Ahead
Portugal’s proposed rental market reform reflects the Government’s attempt to strike a balance between increasing housing supply and improving confidence among landlords.
Whether these measures ultimately achieve that objective remains to be seen.
Supporters believe that greater contractual flexibility and more efficient enforcement mechanisms will unlock additional housing supply and encourage investment in the rental sector.
Critics, however, argue that the reforms may lead to higher rents, greater barriers to accessing housing and reduced protections for vulnerable tenants.
For landlords, tenants, investors and expatriates alike, the coming parliamentary debate will be closely watched, as it will shape the future of Portugal’s housing market for years to come.
Disclaimer
This article is provided for general information purposes only and does not constitute legal advice.
As the proposed legislation is still undergoing the parliamentary process, the final version of the law may differ from the measures outlined above.
Individuals and businesses should seek professional legal advice before making decisions based on the proposed reforms.
At Eres Relocation, we continue supporting companies and assignees throughout every stage of the relocation journey to Portugal.
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