Portugal Eyes German-Style Secure Leases to Calm Rent Prices

Portugal’s new centre-right administration is signalling a decisive shift in housing policy. In its first programme to Parliament the coalition led by Prime Minister Luís Montenegro places rental stability at the top of the agenda, promising an instrument it calls “secure long-term leases.” Although the legal wording is still being drafted, officials say the forthcoming contracts will lock in the initial conditions of a tenancy—including how rent may be updated—so that both landlords and tenants can plan many years ahead.

A Move Born of Soaring Housing Costs

Rents in Portugal’s largest cities have risen at double-digit rates for three consecutive years. Data from the National Statistics Institute show an annual jump of 16.3 per cent in early 2025, the steepest since records began. Domestic salaries have not kept pace and, as any newcomer soon discovers, Lisbon’s average monthly rent now absorbs well over half of an average household’s net income. The previous Socialist government responded with temporary rent caps and short-term subsidies; critics argued those tools discouraged owners from putting homes on the market and froze supply precisely when it was most needed.

What the New Contracts Might Look Like

The government is sketching a framework in which landlords who opt in would sign leases of five years or more—considerably longer than the one-to-three-year arrangements that dominate the current market. Within that period, rent updates would follow a pre-agreed formula, most likely tied to official inflation data, shielding tenants from sudden spikes while giving owners a predictable return. Officials insist participation will be voluntary, an attempt to attract professional investors without imposing blanket controls.

Revisiting Controversial 2019 Reforms

Montenegro’s team has also ordered a review of the changes to the Urban Lease Regime adopted five years ago. Those amendments shortened eviction timelines but simultaneously limited rent increases at renewal, a compromise that pleased neither landlords nor advocates for vulnerable tenants. The new majority says it will study the impact of each clause before drafting replacement legislation later this year.

Faster Ways to Settle Disputes

Parallel to contract design, the programme pledges to beef up the Balcão do Arrendamento—a specialised counter that already handles eviction filings—so that arrears cases can be resolved in weeks instead of months. The justice ministry is exploring the use of peace courts and voluntary mediation, measures intended to unclog the formal court system and reassure property owners that non-payment cases will not drag on indefinitely.

A Broader Strategy to Unfreeze Supply

Secure leases are only one component of a wider plan modelled on last year’s “Construir Portugal” blueprint. The cabinet promises streamlined building permits, tax breaks for build-to-rent developments and the release of thousands of vacant public buildings for conversion into apartments. Financing lines for cooperatives and municipalities are being negotiated with the European Investment Bank, and a goal of 59 000 additional dwellings has been set for the current legislature.

What This Means for Foreign Residents

International renters—particularly digital nomads, retirees and relocated professionals—have felt the brunt of Portugal’s heated market, sometimes facing annual rent jumps of 10 per cent or more. If secure long-term leases land as advertised, foreigners could sign agreements that mirror those in Germany or the Netherlands, where tenancy terms and rent reviews are largely predictable. On the flip side, faster eviction procedures may encourage more private owners to list their properties, gradually expanding the pool of available homes.

Timeline and Next Steps

The housing ministry says draft legislation will be published for public comment before the autumn budget. Industry groups, tenant associations and municipal leaders will then present opinions to Parliament. Assuming the timetable holds, the first secure contracts could appear in the market by early 2026. Until then, expats signing leases should watch renewal clauses closely and stay informed about any transitional rules enacted in the meantime.