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The rental market in Portugal has changed a great deal in recent years: new personal income tax (IRS) rates, limits on deposits, the eviction procedure at a dedicated office and a reform still under discussion in Parliament. In April 2026, our rentals team took part in a training session on rental law and taxation. Here we bring together the most useful lessons, checked against the legislation in force, so that landlords and tenants can avoid the most common mistakes.
In short
- The property must have certified suitability for the purpose of the lease, as a rule through the occupancy licence.
- The deposit is limited to two months’ rent and rent paid in advance to two months.
- Without a specific clause, a short contract renews for three years.
- IRS on rents is 25% and falls with the length of the contract; moderate rents pay 10%.
- With three months of arrears, the landlord can terminate the contract.
1. The contract: requirements and useful clauses
Before signing, confirm that the property can be let for the intended purpose:
«1 – O arrendamento urbano só pode recair sobre locais cuja aptidão para o fim do contrato seja atestada pelas entidades competentes, designadamente através de licença de utilização, quando exigível.» — Civil Code, article 1070(1)
In plain English: an urban lease can only cover premises whose suitability for the purpose of the contract has been certified by the competent authorities, in particular through an occupancy licence, where required.
The property also needs a valid energy certificate, which can be checked on the SCE portal. Two clauses prevent many problems:
- Addresses for notices. State in the contract each party’s address for letters and notices. This makes it easier to prove that a communication was sent (NRAU, art. 9).
- Inventory with photographs. An annex describing the condition of the property, with dated photographs and signed by both parties, is the best evidence if there is a dispute about the deposit at the end of the contract.
The deposit cannot exceed two months’ rent, and rent paid in advance cannot exceed two months, always with a written agreement (art. 1076 of the Civil Code).
2. Terms and renewals: silence counts too
Many landlords are surprised by automatic renewal. But the contract’s silence also has consequences:
«1 – Salvo estipulação em contrário, o contrato celebrado com prazo certo renova-se automaticamente no seu termo e por períodos sucessivos de igual duração ou de três anos se esta for inferior, sem prejuízo do disposto no número seguinte.» — Civil Code, article 1096(1)
In plain English: unless otherwise agreed, a fixed-term contract renews automatically at the end of its term for successive periods of the same length, or of three years if the term is shorter.
A one-year contract with no renewal clause renews, as a rule, for three years. The courts are divided on whether the parties can exclude this rule. In addition, the landlord’s objection to the first renewal only takes effect three years after the contract was signed (art. 1097(3)). Anyone who wants a short contract should write clearly what happens at the end of the term.
3. How much IRS is paid
| Situation | IRS rate |
|---|---|
| Residential lease (general rule) | 25% |
| Contract of 5 to under 10 years | 15% |
| Contract of 10 to under 20 years | 10% |
| Contract of 20 years or more | 5% |
| Moderate rent (until 31 December 2029) | 10% |
The general rate is in the Personal Income Tax Code:
«2 – Os rendimentos prediais decorrentes de arrendamento habitacional, incluindo os referidos na alínea b) do n.º 5 do artigo 8.º, são tributados à taxa autónoma de 25 %.» — Personal Income Tax Code (CIRS), article 72(2)
In plain English: income from residential leases is taxed at a flat rate of 25%.
The 10% rate for moderate rents was created by Decree-Law 97/2026. The moderate rent ceiling is set by reference to the minimum wage:
«a) No caso da renda mensal moderada, 2,5 vezes o valor da retribuição mínima mensal prevista para 2026;» — Decree-Law 97/2026, article 2(2)
In plain English: for a moderate monthly rent, the ceiling is 2.5 times the minimum monthly wage set for 2026.
The tenant, in turn, can deduct 15% of rent paid for a permanent home from their IRS, within the limit of art. 78-E.
4. Rent updates
Rent can be updated once a year, using the published coefficient. In 2026 it was 2.24% and, for 2027, it is 2.56%. The increase must be notified in writing 30 days in advance.
5. Late payment and non-payment
The law distinguishes three situations. The first is simple late payment:
«1 – Constituindo-se o locatário em mora, o locador tem o direito de exigir, além das rendas ou alugueres em atraso, uma indemnização igual a 20 % do que for devido, salvo se o contrato for resolvido com base na falta de pagamento.» — Civil Code, article 1041(1)
In plain English: when the tenant is late, the landlord may demand, on top of the rent in arrears, compensation equal to 20% of the amount owed, unless the contract is terminated for non-payment.
If the tenant pays within eight days of the start of the delay, the right to compensation no longer applies (art. 1041(2)).
The second is a debt of three months or more, which allows the landlord to terminate the contract (art. 1083(3)). The tenant can still stop the termination by paying within one month (art. 1084(3)).
The third is repeated late payment. Delays of more than eight days, more than four times in 12 months, also allow termination. But there is a condition: after the third delay, the landlord must warn the tenant by registered letter with acknowledgement of receipt that they intend to end the contract on that ground (art. 1083(4) and (6)). Without that letter, the termination fails.
6. Eviction
If the tenant does not leave, the landlord can use the special eviction procedure:
«Este procedimento, de tramitação eletrónica, corre termos exclusivamente no Balcão do Arrendatário e do Senhorio (BAS), organismo dependente da Direção-geral da Administração da Justiça (DGAJ) e que abrange todo o território nacional.» — Tribunais.org.pt, Special eviction procedure
In plain English: this procedure is handled electronically and exclusively by the Tenant and Landlord Office (BAS), a body under the Directorate-General for the Administration of Justice (DGAJ) that covers the whole country.
7. The reform under discussion
In September 2026, Parliament approved in general terms a bill that changes the rules on deposits, late payment and contract renewal. It is not yet law. Until it is published, the rules in this article apply. Follow the rental reform checklist and see the comparison of short-term or long-term rentals in Lisbon.
How Condoroo helps
Condoroo manages more than 600 condominiums and follows the legal changes that affect landlords and tenants in buildings under horizontal property. Condominium contributions are owed by the owner, not the tenant, and the condominium regulations should be handed over with the contract. We have €500,000 civil liability insurance and received the DECO seal for the third year running. Find out more about rental management.
Rental market 2026: frequently asked questions
What is the maximum deposit in 2026?
Two months’ rent (art. 1076(2) of the Civil Code).
For how long does a one-year contract renew?
Unless otherwise agreed, for three years.
How much IRS does a landlord pay on rent?
25% as a rule, with rates of 15%, 10% and 5% for long contracts and 10% for moderate rents.
How much can rents rise in 2027?
Up to 2.56%, with written notice to the tenant 30 days in advance.
When can the landlord terminate the contract for non-payment?
When the debt reaches three months, or with delays of more than eight days more than four times in 12 months, after a warning by registered letter.
Where does the special eviction procedure take place?
At the Tenant and Landlord Office (Balcão do Arrendatário e do Senhorio, BAS).
This article is for information only. Legislation and websites consulted on 26 October 2026.
