Portugal Caps 2026 Rent Increases at 2.24%
The Portuguese government has officially set the maximum allowable rent increase for 2026 at 2.24%, according to a notice published this Friday in the Diário da República. The legal coefficient, 1.0224, will apply to rental contracts starting from January 1, 2026, in cases where no other update mechanism is stipulated by the parties involved. This figure dictates the ceiling for annual rent adjustments, providing a measure of predictability for the national housing market.
The coefficient is derived from the annual average of the Consumer Price Index (CPI) excluding housing, as stipulated by Article 24 of Law No. 6/2006 and Article 11 of Decree-Law No. 294/2009. This year's rate marks a slight increase from the 2.14% authorized for 2025. However, it remains substantially below the 6.94% figure that would have resulted from the pure inflation rate, a scenario averted by a government-imposed cap aimed at mitigating the economic pressure on tenants.
The annual update applies to most forms of rental agreements, including residential leases, that have been in effect for at least one year. Since last year, this mechanism has also been extended to include rental contracts established before 1990, known as 'old rents,' which had not transitioned to the New Urban Lease Regime (NRAU) and had their values frozen for many years. This change was part of the 2012 rent law reform, designed to gradually align these older contracts with contemporary market conditions.
Data from the first quarter of 2025 indicates that the median price of new rental contracts in Portugal has continued to climb, showing a 10% increase compared to the same period in the previous year. This growth in rental prices has outpaced salary increases across the country. Over a five-year period, the cumulative increase in median rents has exceeded 70%, reflecting sustained pressure on the housing market.
While the application of the 2.24% increase is at the discretion of the landlord, it is not automatic. Property owners who decide to implement the update must formally notify their tenants at least one month in advance. This communication must be sent via registered mail with an acknowledgment of receipt and must clearly explain the basis for the calculation of the new rental amount. The final updated value can be rounded to the nearest cent.
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The Ministry of Housing has reiterated that these measures are part of a broader strategy to ensure stability and affordability in the rental sector. An official from the ministry stated, "The government's objective is to strike a balance between the rights of property owners to a fair return and the need to protect tenants from abrupt and unsustainable price shocks, particularly in the current economic climate."
Real estate associations have acknowledged the need for a predictable regulatory framework. The president of a national landlords' association commented, "While the coefficient is below the full inflation rate, the consistency of the legal framework is crucial for maintaining confidence in the market. It allows for methodical planning on both sides of the rental agreement."
The official notice in the Diário da República solidifies the financial parameters for the rental market heading into 2026. Landlords and tenants are advised to review their contracts and be aware of the legal procedures required for any rent adjustments. The government is expected to continue monitoring housing market indicators closely to inform future policy decisions.
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