Residential Lease Agreements in Portugal – Legal Framework and Practical Considerations

Tomás Melo Ribeiro | Lawyer

The Portuguese legal framework governing residential leases is rooted in principles of contractual autonomy, proportional protection of housing stability and legal certainty. While parties remain free to shape many aspects of their contractual relationship, the law imposes mandatory rules on lease duration, renewal, termination, communications and rent updates, establishing a balanced structure intended to safeguard both landlords and tenants. Understanding these provisions is essential to prevent disputes and ensure compliance with the Urban Lease Regime (Regime do Arrendamento Urbano – RAU) and the Civil Code.

Duration of Residential Leases

A. Fixed-Term Leases
Fixed-term residential leases are widely used in Portugal and are strictly regulated. The law requires that the initial duration be no shorter than one year and no longer than thirty years. Any contractual provision outside these limits is automatically adjusted to the statutory minimum or maximum, ensuring the enforceability of the agreement while preventing legally incompatible durations.

These limits do not apply to leases expressly concluded for non-permanent or temporary occupation. Typical examples include temporary professional relocation, academic or vocational training, internships, or other short-term needs. In such cases, the exceptional and temporary nature of the occupation must be clearly identified in the contract; otherwise, the lease may be recharacterised as permanent housing, with the corresponding legal constraints.

Fixed-term leases renew automatically unless renewal is contractually excluded. The renewal period generally mirrors the initial term, although shorter contracts may renew in three-year cycles by operation of law. This mechanism promotes continuity while allowing periodic reassessment of contractual terms.

Both parties may oppose automatic renewal. The statutory notice periods for landlords are as follows:

• 240 days for leases of six years or more.
• 120 days for leases from one to six years.
• 60 days for leases from six months to one year.
• One-third of the contractual term for leases under six months.

Tenants benefit from shorter notice periods and may terminate the lease after one-third of the initial duration has elapsed, provided they give:

• 120 days’ notice for contracts of one year or more.
• 60 days’ notice for shorter terms.
  

If the landlord has already notified opposition to renewal, the tenant may terminate the agreement at any point before the end date by giving 30 days’ notice. These rules ensure predictability and prevent abrupt termination, preserving a fair balance between contractual stability and flexibility.

B. Indefinite-Duration Leases
Leases may also be concluded for an indefinite duration. This model offers tenants strong protection and housing stability. After six months of effective occupation, tenants may terminate the lease at any time, without having to justify their decision, provided they give:

• 120 days’ notice for leases of one year or more.
• 60 days’ notice for leases under one year.

Landlord’s Termination Rights in Indefinite-Term Leases

In contrast to tenants, landlords enjoy very limited rights to terminate indefinite-term residential leases. Termination is legally permissible only in the following situations:

• When the property is required for the landlord’s or a first-degree descendant’s permanent residence.
• When demolition or deep structural works are necessary, including renovations that are incompatible with continued occupation and do not result in an equivalent dwelling.
• When the landlord opts for termination without cause, which requires giving the tenant at least five years’ written notice.

Outside these exhaustively listed situations, landlords cannot unilaterally terminate an indefinite-term residential lease. Any termination attempt that falls outside the statutory grounds risks being declared invalid.

Legal Requirements for Communications

The law establishes formal requirements for communications related to renewal, termination and rent updates. These rules ensure legal certainty and help prevent disputes grounded in defective notification.

Notices to tenants must be sent to the leased premises unless the tenant has previously indicated a different address in writing. Notices to landlords must be sent to the address identified in the contract or subsequently communicated.

A notice is deemed legally effective even if:

• the addressee refuses delivery, or
• it is received by someone other than the intended recipient at the legally designated address.

For family homes, notices issued by the landlord must be addressed to both spouses, while notices from tenants may be validly signed by either spouse. These formalities reflect the legislator’s goal of ensuring transparency and clarity in communications that affect the legal position of both parties.

Rent Updates

Leases may include their own mechanism for rent updates. In the absence of such a clause, landlords may apply the annual statutory update coefficient published by the National Statistics Institute (INE), provided at least one year has elapsed since the lease began or since the last update.

The coefficient is based on the Consumer Price Index (excluding housing). As an example, the 2025 coefficient of 1.0216 corresponds to a 2.16 percent increase. When rent has not been updated for three consecutive years, cumulative coefficients may be applied, although subject to a global cap (currently 11.1 percent), preventing disproportionate increases.

Special transitional rules remain in place for pre-1990 leases that have not transitioned to the Novo Regime do Arrendamento Urbano (NRAU). In those cases, rent updating requires a formal procedure initiated by the landlord, and tenants may oppose increases based on specific socioeconomic vulnerability criteria protected by law.

Conclusion

Residential lease agreements in Portugal are governed by a comprehensive and protective legal framework that balances contractual freedom with strong safeguards for tenants and legitimate expectations for landlords. Knowledge of the statutory rules governing duration, renewal, termination, rent updates and communication requirements is essential to avoid invalid acts, prevent disputes and ensure compliance with the Urban Lease Regime.

In a rental market that is increasingly dynamic and legally complex, precise drafting and specialised legal advice are key to securing stable, transparent and enforceable contractual relationships for both landlords and tenants.