Long term rental in Portugal is a booming market.
Since the banks in Portugal nearly stopped 2010 / 2011 to finance properties in Portugal the demand for rental housing in Portugal has increased. The uncertainty and little liquidity in the mortgage market is leading to a rapidly increasing rental demand.
In the past very old laws, which have during long years given tenants controlled rents have discouraged landlordism and at the same time the housing subsidies given by the Portuguese government pushed owner rates up from 52% in 1981, to 75% in 2001. Portugal has one of the highest owner-occupation rates in Europe, as there were only about 10% of the population tenants in Portugal.
Finally the New Urban Rental Laws ( "NRAU") were released in June 2006. The new laws should revive the slow rental market in Portugal and give more security to landlords, but the implementation of these new housing laws were still not enough.
Here are the most important contents of the NRAU:
- The rents can be freely agreed.
- The minimum term for long term residential tenancies is 5 years.
- There are automatic extensions of three years, but the landlord is able to prevent renewal giving notice 1 year before.
- With the contractual termination agreement, judicial proceedings are not necessary.
A new law package is expected during April 2012, which allows landlords in case of nonpayment to go through a judicial procedure within a record time of 3-4 months. Investors in the real estate market in Portugal are looking impatiently forward to these new laws.