Thousands of tenancy agreements signed before 1990 remain in effect, with rent values completely disconnected from the country’s current economic and housing reality. Many landlords receive rents so symbolic that they cannot even cover the minimum maintenance costs of the properties. This imbalance is one of the factors feeding the housing crisis: it discourages leasing, leads to the degradation of the building stock, and contributes to the contraction of supply.

Despite efforts to modernize the legal framework with the introduction of the New Urban Rental Regime (NRAU) in 2006, the transition to this new model has been repeatedly postponed. The exceptions kept for older leases, even when justified on social grounds, ended up crystallizing a prolonged injustice for landlords, who are forced to bear the financial burden of a public policy without any compensation.

It is time to look to the future and find solutions that guarantee protection for those who truly need it, while also restoring contractual justice and encouraging the revitalization of the rental market in Portugal.

The origins of the rent freeze in Portugal lie in early 20th century legislation and were further intensified during the Estado Novo through the imposition of rigid rent limits and successive restrictions on contractual freedom. After the 25th of April 1974, the trend worsened with measures that suspended evictions and blocked rent updates, consolidating a regime that would extend for decades in pre-1990 residential leases.

With the entry into force of the NRAU, approved in 2006, an effort was made to establish a system for progressive rent updates, particularly through a transition mechanism to the general legal regime. However, this transition was strongly conditioned by the need to protect elderly or low-income tenants.

The 2012 reform attempted once again to move rents closer to market values, setting time limits for the maintenance of the previous regime. Nonetheless, the “Mais Habitação” Program, more recently introduced, made it a priority to protect tenants with older leases, effectively maintaining the freeze and introducing new obstacles to the transition of contracts into the general regime.

This persistent exception regime, though nuanced, has created a profoundly asymmetric urban rental market, with thousands of contracts still governed by outdated rents, misaligned with today’s economic and legal context.

The continued freeze over decades has generated a deep imbalance between landlords and tenants. In many cases, landlords receive monthly rents below fifty euros, which do not even cover basic maintenance and conservation costs. This contractual imbalance undermines the principle of equivalence of obligations, disincentivizes investment, and encourages the abandonment of urban buildings, with clear consequences for quality of life and urban safety.

Leases have now been frozen for over a decade and, surprisingly, just when it was expected that this freeze would finally end, the 2025 State Budget brought a new surprise. It sets out the intention to “correct the distortions created in recent years in the legislation on urban leases, by taking the necessary measures to conclude the transition processes of residential tenancy agreements signed before 1990”. However, it seems unlikely that these measures will include the long-awaited lifting of the freeze that landlords have been expecting for so many years.

We must now await the legislative elections scheduled for May to see whether the 'Construir Portugal' package-which was being implemented slowly and includes the promised reform of the rental law and the end of this unequal and asymmetric regime-will in fact move forward. Until then, landlords will have to wait, patiently, for the long-anticipated thaw.

by Inês Melo dos Santos, Senior Associate at CCA Law Firm.

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