Rents could rise by 6.94% next year without a government brake

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The value of rents could increase by 6.94% in 2024 if the government does not establish, as it did this year, a limit on updates, according to the August inflation figures released today by the National Statistics Institute (INE).

According to INE data, in the last 12 months to August the average change in the price index, excluding housing, was 6.94%, the figure that serves as the basis for the coefficient used for the annual update of rents for next year, under the New Urban Lease Regime (NRAU), and which represents an extra 6.94 euros for every 100 euros of rent.

However, the actual value of the rent update – applicable to both urban and rural areas – will only be determined on September 12, when INE publishes the final CPI data for August 2023, and will then have to be published in the Diário da República by October 30.

This year, faced with the 5.43% update coefficient determined by inflation figures until August 2022, the government decided to go ahead with a brake rule that limited rent updates to a maximum of 2%, compensating landlords.

Asked by ECO whether it will repeat the brake on rents in 2024, the Ministry of Housing said that “the government is monitoring the evolution of the data” and that the “matter remains under analysis until there is definitive data”.

In 2022, rents rose by 0.43%, after being frozen in 2021 (following the negative variation in the price index) and recording increases of 0.51% in 2020, 1.15% in 2019, 1.12% in 2018, 0.54% in 2017 and 0.16% in 2016.

By law, rents are generally subject to annual updates that are applied automatically in line with inflation. The NRAU stipulates that the INE is responsible for determining the coefficient for updating rents, which must be included in a notice to be published in the Diário da República by October 30 of each year in order to become effective.

Only after publication in the Diário da República can landlords announce the rent increase to tenants, and the increase can only actually take place 30 days after this notice.

According to the rental law, the first update can be demanded one year after the contract comes into force, and the following ones one year after the previous update, with the landlord having to communicate in writing, at least 30 days in advance, the update coefficient and the new rent that results from this calculation.

If they don’t want to, landlords are not obliged to apply this update.

Rents prior to 1990, however, have been updated since November 2012, according to the NRAU, which allows older rents to be increased through a process of negotiation between landlord and tenant. If they have been subject to this extraordinary updating mechanism, they are exempt from the new increase.

Iris Lavan
Iris Lavan
With a background as a consultant in the medical industry, Iris Lavan brings a wealth of knowledge and expertise to Portugal Pulse. Iris also runs a company in Tel Aviv offering marketing, business development, content creation and public relations services. She holds a degree in economics and management, giving her a solid grounding in business strategy and financial planning. Iris' commitment to Portugal Pulse is reflected not only in her consulting career, but also in her impact on the Portugale media landscape in Israel. She was an interviewer for Hadshot Portugal חדשות פורטוגל, a media outlet that broadcasts news about Portugal in Hebrew, where she provided valuable information on current affairs, healthcare and the economy. Since July 2023, Iris has also been part of the Portugal Pulse team.

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