Portugal parties split on how to revive rental market

Portugal’s main parties are advancing sharply different plans for the housing rental market as new rents continue to rise, highlighting political uncertainty over a reform that matters for landlords, tenants and investors. The government’s proposed rewrite of the rental law passed an initial parliamentary stage on September 30, but still depends on detailed negotiations and may fail without support from Chega.

New rents in Portugal rose 10.2% year on year in the second quarter, reaching a median of €10.17 per square metre, based on data from INE, the national statistics office. The government argues that giving landlords more legal certainty and contractual freedom would bring more homes onto the market, including by removing some limits introduced under the previous “Mais Habitação” programme, allowing higher upfront payments and deposits, and tightening rules on late rent payments.

That approach is facing resistance from both left-wing parties and Chega, albeit for different reasons. Chega has warned it could vote against the bill in committee unless the government includes changes agreed with the PSD, including limits on advance payments and deposits and protections for older tenants under pre-1990 contracts. The party has also proposed a separate housing package, including a 50% increase in personal income tax deductions for rents and mortgage payments.

The Socialist Party (PS) opposes the government’s rental law overhaul and instead backs tax incentives and public guarantees to reduce the risk for landlords. PS leader José Luís Carneiro added a proposal for five-year contracts, if both sides agree, with rental income taxed at 5% and state coverage in case of non-payment. Liberal Initiative (IL), which supported the government in the initial vote, wants to end rent-freezing mechanisms, while Livre, the Communist Party (PCP) and the Left Bloc (BE) favour stricter rent limits and stronger contract protections.

The next stage of the debate will determine whether the government can turn its parliamentary authorisation into a final law. PSD, CDS-PP and IL together fall short of a majority, while PS has already voted against the measure, leaving Chega in a pivotal position.

Originally published at Eco.pt