Renting property is a common practice in Portugal since most people choose to do so.
Therefore, understanding the legal framework governing rental contracts in Portugal is essential. The Portuguese Civil Code establishes the general provisions applicable to lease agreements, while the New Urban Lease Regime (Law no. 6/2006, of February 27) provides a specific regime for urban leases.
The Law lays down some essential elements that must be included in lease agreements, which must be in writing according to the Law. Thus, lease agreements must contain, among other things, complete identification of the parties and the property which is the subject of the agreement, the duration of the contract – which may be for a fixed term or an indefinite period – the amount and method of payment of the rent, the conditions for renewal and termination of the agreement and other contractual clauses which the parties consider necessary, such as, for example, improvements or liability for charges related to the property.
In the regulations on urban leases, there is a growing tendency to protect the tenant by providing for extensive rights, such as:
- Prohibition of discriminatory rent increases
The NRAU establishes that rents can be updated annually based on the contractual clauses, which must specify the criteria for this update. These criteria can be based on the inflation rate, specific price indices or other economic indicators. If there is no provision for updating rents, the update coefficients in force at the time will apply.
Thus, according to the Law, it is clear that the value of the rent cannot be updated arbitrarily but according to the criteria previously established in the contract or the Law.
- Requirement of just cause for the landlord to terminate the contract
When terminating rental contracts, specific ways are set out in the Law, such as agreement between the parties, termination, expiry or denunciation.
However, in line with the trend towards protecting the tenant, the Law stipulates that, within the scope of a fixed-term contract, the landlord can only terminate it when is faced with a breach which, due to its seriousness or consequences, makes it unenforceable for the other party to maintain the lease. Examples of these situations are the violation of hygiene rules, quiet, good neighbourliness, the use of the property contrary to the Law, good customs or public order, the non-use of the property for more than one year, the use of the property for a purpose other than that for which it was intended or the assignment of the enjoyment of the property to a third party when this possibility is not provided for in the contract. The landlord can also terminate the agreement when he needs the property for his residence or that of a first-degree descendant.
Apart from these situations expressly provided for in the Law, the landlord may terminate the contract when the tenant fails to comply with his obligation to pay the rent, charges or expenses in three or more months and also if the tenant is more than eight days in arrears in paying the rent, for more than four times, consecutive or interpolated, in a period of 12 months.
Conversely, the tenant may terminate the lease at any time after one-third of the initial term of the lease or its renewal has elapsed, limited only by the notice period.
- Prohibition of harassment and discrimination in renting
The Law has ensured that all potential tenants are treated fairly and equally, regardless of their race, religion, gender, sexual orientation, disability or other personal and subjective characteristics.
Thus, landlords must treat all potential tenants fairly and impartially during the selection process, assessing applicants based on objective criteria. Landlords may not refuse an applicant, the conclusion of a contract, or apply unfavourable conditions based on subjective characteristics, nor may they advertise a property in a discriminatory manner, including specific requirements that violate equal treatment.
- Deadlines
Finally, a mirror of the more excellent protection of tenants for landlords is the establishment of more extended deadlines for landlords to oppose the renewal of rental contracts, compared to the deadlines offered to tenants; the establishment of a prior notice that must be given to the tenant, in writing, before the landlord proceeds with the eviction, a period that must be adequate; the establishment of specific provisions to protect vulnerable tenants, such as older people, people with disabilities and low-income families. These provisions aim to prevent unfair evictions and guarantee housing security for these groups.
In conclusion, there has been a change in the Law’s approach, which has tended to protect tenants more. Nevertheless, the landlord is always protected from any defaults by the tenant, and the Law also safeguards his obligations and rights.
The content of this information does not constitute any specific legal advice; the latter can only be given when faced with a specific case. Please contact us for any further clarification or information deemed necessary in what concerns the application of the law.