Renovating a rented property in Portugal can become complicated when the work is extensive enough that nobody can remain in the home while it is carried out. The Government now wants to change some of the rules that apply in those situations.
A proposal sent to Parliament would allow landlords to end open-ended rental contracts when major renovation or restoration requires the property to be vacated, with three years’ notice instead of five. The proposal still requires parliamentary approval and none of these changes are currently in force.
The Government also wants to simplify what qualifies as major renovation. The present regime includes specific technical and planning requirements and uses the cost of the work as part of the test.
Under the proposal, the definition would rely more directly on a quantitative threshold based on construction costs and statistical indicators.The changes go further than notice periods.
When a tenant has to leave permanently, landlord and tenant could agree either on compensation or alternative accommodation. Compensation would correspond to two years’ rent, while the existing minimum linked to the property’s taxable value would disappear.
If they choose rehousing, the replacement property would have to offer similar conditions in terms of location, rent, charges and the remaining duration of the contract. The period for reaching an agreement would fall from 60 to 30 days.
Older and vulnerable tenants would retain additional protection. Where a tenant is 65 or older, or has a certified disability above 60%, the landlord would have to provide suitable alternative accommodation if no agreement is reached, followed by a new open-ended rental contract.
There is also a separate rule for works that only require the tenant to leave temporarily. The proposal would allow the landlord to request that the property be vacated for up to 180 days, provided at least three months’ notice is given.
For owners of older buildings in Lisbon, Porto and other cities where major rehabilitation is common, these changes could remove some of the uncertainty around properties that are already occupied.
They would also reduce some of the protection tenants currently have when renovation leads to the end of a long-term contract. That balance will now be decided in Parliament, and the final law may still look different from the proposal currently on the table.
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