Portuguese Lease Law: what may change under the bill no. 103/XVII

The Portuguese Government is preparing a reform of the urban lease regime. The bill restores contractual freedom to landlords, strengthens the remedies available to them in the event of tenant default, and simplifies eviction procedures, while correspondingly transferring part of the social protection afforded to vulnerable tenants to the State.

This is a bill that has already been approved in general terms and now moves to detailed committee discussion and vote. The final text may still change significantly, and several points depend on further densification. The information below is not definitive and will be subject to updates as the legislative process develops.

Key changes

	Current Regime	Proposal
Initial Rent and Rent Updates	Law 56/2023 imposed 2% cap over the previous rent for setting the initial rent in subsequent agreements over the same premises; specific legal limits on annual rent updates.	Article 34 (2% cap in subsequent agreements) and the update limits are repealed; initial rent and updates freely agreed between the parties.
Security Deposit and Advance Rent	Article 1076 of the Civil Code: deposit capped at 2 months’ rent; advance capped at 2 months, subject to a written agreement between the parties.	Deposit uncapped as to form and amount; advance raised to up to 3 months, subject to the same written agreement requirement.
Landlord’s (unmotivated) Termination	Article 1101(c) of the Civil Code: 5 years’ notice for termination without justification.	Notice period reduced to 3 years.
Termination for Works or Demolition	Requires that the works not result in premises with equivalent characteristics.	This requirement is removed; only proof that the planning procedure has started and compensation or rehousing are required.
Termination for Arrears	Article 1084 of the Civil Code: termination available with arrears of 3 months or more, or late payments of more than 8 days occurring more than 4 times in 12 months; curing of arrears allowed; notice required after the 3rd late payment.	Relevant arrears reduced to 2 months, or late payments of more than 8 days occurring more than 3 times in 12 months or more than 4 times in 18 months; curing arrears no longer possible; notice required already after the 2nd late payment; limitation period extended from 3 to 6 months.
Tenant’s Right of First Refusal	Article 1091 of the Civil Code: tenant’s right of first refusal applies where the lease has lasted more than 2 years.	Now requires that the lease has lasted more than 3 years.
Transmission on Death	Article 1106 of the Civil Code and Law 6/2001: transmission covers common-economy cohabitants; de facto union of more than 1 year required.	Excludes common-economy cohabitants (Law 6/2001 now refers to special legislation); requires de facto union of more than 2 years; introduces a closed, ranked list of beneficiaries.
Pre-1990 Agreements	Article 35(1) of Law 56/2023: transition of these contracts to the NRAU is blocked.	Article 35(1) is repealed; transition allowed at the landlord’s initiative, with specific safeguards for low-income tenants, elderly tenants, or tenants with a disability rating of 60% or more.
Eviction	General Code of Civil Procedure regime: appeals in actions on the validity, continuation or termination of leases have suspensive effect; no automatic immediate eviction upon a successful claim.	Article 647 of the Code of Civil Procedure: appeals become merely devolutive; immediate eviction upon a successful claim, with the court ruling of its own motion on entry into the dwelling.

Current Regime

Proposal

Initial Rent and Rent Updates

Law 56/2023 imposed 2% cap over the previous rent for setting the initial rent in subsequent agreements over the same premises; specific legal limits on annual rent updates.

Article 34 (2% cap in subsequent agreements) and the update limits are repealed; initial rent and updates freely agreed between the parties.

Security Deposit and Advance Rent

Article 1076 of the Civil Code: deposit capped at 2 months’ rent; advance capped at 2 months, subject to a written agreement between the parties.

Deposit uncapped as to form and amount; advance raised to up to 3 months, subject to the same written agreement requirement.

Landlord’s (unmotivated) Termination

Article 1101(c) of the Civil Code: 5 years’ notice for termination without justification.

Notice period reduced to 3 years.

Termination for Works or Demolition

Requires that the works not result in premises with equivalent characteristics.

This requirement is removed; only proof that the planning procedure has started and compensation or rehousing are required.

Termination for Arrears

Article 1084 of the Civil Code: termination available with arrears of 3 months or more, or late payments of more than 8 days occurring more than 4 times in 12 months; curing of arrears allowed; notice required after the 3rd late payment.

Relevant arrears reduced to 2 months, or late payments of more than 8 days occurring more than 3 times in 12 months or more than 4 times in 18 months; curing arrears no longer possible; notice required already after the 2nd late payment; limitation period extended from 3 to 6 months.

Tenant’s Right of First Refusal

Article 1091 of the Civil Code: tenant’s right of first refusal applies where the lease has lasted more than 2 years.

Now requires that the lease has lasted more than 3 years.

Transmission on Death

Article 1106 of the Civil Code and Law 6/2001: transmission covers common-economy cohabitants; de facto union of more than 1 year required.

Excludes common-economy cohabitants (Law 6/2001 now refers to special legislation); requires de facto union of more than 2 years; introduces a closed, ranked list of beneficiaries.

Pre-1990 Agreements

Article 35(1) of Law 56/2023: transition of these contracts to the NRAU is blocked.

Article 35(1) is repealed; transition allowed at the landlord’s initiative, with specific safeguards for low-income tenants, elderly tenants, or tenants with a disability rating of 60% or more.

Eviction

General Code of Civil Procedure regime: appeals in actions on the validity, continuation or termination of leases have suspensive effect; no automatic immediate eviction upon a successful claim.

Article 647 of the Code of Civil Procedure: appeals become merely devolutive; immediate eviction upon a successful claim, with the court ruling of its own motion on entry into the dwelling.