Parliament Debates Rental Law Reform Ending 2% Cap

Portugal's Parliament debates a government bill today that would overhaul the New Urban Lease Regime (NRAU), Civil Code, and Civil Procedure Code. The proposal eliminates the 2% cap on rent updates for new contracts, allows landlords to request up to three months' rent in advance, and removes the legal ceiling on security deposits.

Eviction procedures would accelerate: landlords can terminate contracts after two months of arrears or repeated late payment, and appeals in eviction cases would lose suspensive effect. The government argues these changes increase contractual freedom and make landlord risk more predictable, aiming to bring vacant properties to market.

“The reform seeks to simultaneously give owners greater capacity to manage contract risk and create public responses for tenants without economic capacity to follow the changes.”

For pre-1990 contracts, the bill maintains specific protections for tenants over 65 or with disability of 60% or more, conditioning rent updates on household income with a referenced threshold of 64. A Housing Emergency Fund would cover emergency rehousing costs for economic hardship or domestic violence cases.

The debate occurs one day after the National Statistics Institute (INE) reported new-lease rents rose 10.2% year-on-year in Q2 2026. The government estimates 375,000 vacant homes nationwide based on the 2021 Census. Opposition parties, tenant groups, and other entities have signaled strong resistance to the measures.