Old rental contracts, signed before the New Urban Lease Regime (NRAU) came into force, are back in the spotlight under the reform put forward by the government.
The package approved by the Council of Ministers aims to change the rules currently in place and separate tenants according to age and income, allowing, in certain cases, a move to the NRAU and rent updates based on the property’s Taxable Asset Value (VPT).
The main change, as reported by the newspaper ECO, is the division of tenants into four groups, defined by age, under 65 or 65 and over, and by the household’s annual income, keeping the €64,400 per year threshold as the reference point.
It is worth noting that this rental reform is still going through the legislative process and must be approved by Parliament.
What happens to old rents?
Tenants under 65 with an annual household income below €64,400
- The contract moves to the NRAU.
- For five years, the rent remains unchanged and may only be updated in line with the annual legal coefficients.
Tenants under 65 with an annual household income above €64,400
- The contract also transfers to the NRAU.
- The rent can be immediately updated to 1/15 of the property’s Taxable Asset Value (VPT).
- This mechanism brings the rent closer to the property’s official taxable value.
Tenants aged 65 or over with an annual household income below €64,400
- The contract remains under the previous regime and does not move to the NRAU.
- The rent continues to be subject only to the annual updates set by law, indexed to the rent update coefficient, without applying the 1/15 of VPT formula.
Tenants aged 65 or over with an annual household income above €64,400
- The contract also remains outside the NRAU.
- However, the rent may be updated up to the limit of 1/15 of the VPT.
Compared with the system currently in force, the most significant change affects tenants under 65. Under the Mais Habitação package, these contracts remained protected, with no possibility of transferring to the NRAU, and rent increases were limited to the annual updates.
The newly approved proposal removes that protection for this group, although it still provides a five-year period without additional increases for lower-income households.
Tenants aged 65 and over continue to be protected in terms of staying under the old regime, but they no longer benefit from a uniform safeguard. According to the Government’s proposal, households earning more than €64,400 per year may face a rent update calculated on the basis of the property’s taxable value, a solution that did not exist under the previous model.
As the publication notes, the new rules also maintain the principle that the transition of old contracts depends on the landlord’s initiative. The landlord must notify the tenant of the intention to amend the contract, present the proposed rent and demonstrate that the tenant does not meet the legal protection requirements that would prevent the change.
Stay in the know about living in Portugal as a foreigner—get our weekly newsletter for the latest travel, legal, and lifestyle news.
