Portugal moves to speed up evictions and end rent controls in housing reform

The Council of Ministers approved the reform on Thursday, 9 July 2026, as part of the “Construir Portugal” programme. The government says the changes are needed to bring more of the estimated 250,000 empty homes onto the market and to reverse what it calls failed policies of the previous administration. Median rents have risen 68% since 2020, and more than 23% of rental contracts are over 20 years old.

What the reform changes

At the centre of the package is the abolition of the 2% ceiling on rent increases for new contracts, a measure introduced by the former Socialist government under the “Mais Habitação” law and originally due to run until 2029. The government is ending it three years early. “It has already proved it does not work,” said Infrastructure and Housing Minister Miguel Pinto Luz. Landlords and tenants will now be free to negotiate new rents without state-imposed limits.

Other liberalising steps include raising the maximum advance rent payment from two to three months and removing the cap on security deposits, which was previously set at two months’ rent. Landlords will also be able to refuse automatic contract renewal with a simple prior notice, reversing a rule that delayed the effect of such opposition by three years. Electronic communications for formal notices between parties become legally admissible.

Evictions and tenant protections

The reform shortens the period of rent arrears that can trigger an eviction from three months to two. For repeated late payment, a landlord can start proceedings if the tenant is more than eight days late on at least three occasions within 12 months, or four times within 18 months. The government says it wants to “tighten the mesh” and penalise non-compliance.

At the same time, new rules govern the transition of pre-1990 contracts to the New Urban Lease Regime (NRAU). Tenants under 65 with an annual household income below €64,400 will keep their current rent for five years. If income exceeds that threshold, the rent can be updated to 1/15 of the property’s tax value. For tenants over 65, the contract does not move to the NRAU, but if household income tops €64,400 the rent is likewise adjusted to 1/15 of the tax value.

Political and sector reactions

The Portuguese Communist Party (PCP) condemned the measures. Parliamentary leader Paula Santos said the government was “pushing tenants onto the street” and called the package “a genuine precarisation” that would worsen already “unaffordable” rents.

This set of rental measures is another piece that fits into the government’s political choice where housing is not a right, it is a business, a commodity, and it clearly contributes to increasing prices, in this case rents, which in our country are already extremely high, unaffordable.

The Lisbon Property Owners Association (ALP) was also critical, arguing the reform does not go far enough. It described the continued protection of tenants earning up to €64,400 a year as “institutionalised injustice”, noting that many landlords have lower incomes than their tenants. The association said calling the package a reform was “misleading the country”.

Maintaining frozen rents in the name of social justice, especially when incomes of up to €64,400 per year are admitted, is turning an old injustice into a new one.

Menezes Leitão, a representative of property owners, told TSF that the changes were merely a “slight attenuation” of the previous “Mais Habitação” law and that the transition of old contracts remained “blocked in practice”. He described the reduction of the eviction waiting period by one month as a “tiny adjustment”.

It surprises us that a government which should be reformist, and which had the PSD and CDS fighting against ‘Mais Habitação’ when it was proposed by the previous PS government, is now purely and simply wanting to continue following it.

The housing emergency fund

To offset the faster eviction process, the government will create a Housing Emergency Fund managed by the state housing institute IHRU. Vulnerable households can apply for support worth one IAS (€537.13) for accommodation expenses or relocation costs of up to €2,300 per month, for a maximum of six consecutive months. The fund will be financed through the state budget, but Minister Pinto Luz did not specify the amount to be allocated. He noted that government housing support in 2025 totalled €700 million.

The government will now seek legislative authorisation from Parliament to enact the package. Minister of the Presidency António Leitão Amaro said he was “optimistic” it would pass.