Should we renew our lease or move?

In Portugal a fixed-term lease on your home renews by itself unless one of you gives notice in time, and the landlord can’t stop the first renewal until three years after signing. Rent can rise once a year by an official coefficient: 2.24% in 2026 and 2.56% in 2027. A reform bill now in Parliament could change several of these rules, so check the date and terms of your contract.

How renewal works

Most leases on a permanent home are fixed-term (prazo certo), from 1 to 30 years. If the contract says nothing about length, it is treated as a 5-year lease. At the end of the term:

Courts have disagreed on how far a contract can depart from the 3-year renewal rule, so read the renewal clause in yours and ask a lawyer if it matters to you.

When the landlord can refuse to renew

• The notice period runs back from the end date of the term or renewal
• The 3-year protection doesn’t apply if the landlord needs the home for themselves or their children. The own-use rules then apply, with adaptations: they must normally have owned it for more than 2 years and have no suitable home of their own locally, give 6 months’ notice stating the reason, move in within 3 months and live there for at least 2 years. If they don’t, they owe compensation of 10 years’ rent
• No other reason is needed for a refusal that respects the notice periods and the 3-year rule
• If the landlord refuses renewal, you can leave earlier with just 30 days’ notice

Giving notice yourself

Early termination takes effect at the end of a calendar month. If you give less notice, the lease still ends, but you owe the rent for the missing days, unless the reason is involuntary unemployment, permanent incapacity or death. Notices about ending the lease, rent updates and works are normally given in writing, signed, by registered letter with acknowledgement of receipt (carta registada com aviso de receção), sent to the address in the contract.

Rent rises at renewal

If the contract has its own update rule, that applies. If not, the landlord can update the rent once a year using the official coefficient, the first time one year after the lease began. They must write to you at least 30 days before, giving the coefficient and the new rent. Unused updates can be applied later, but only within 3 years.

What Mais Habitação changed

The 2023 housing package (Lei 56/2023, known as Mais Habitação) still shapes moves now:

• Rent cap on a new lease: if the home was let in the 5 years before the law came in, the first rent of a new lease can’t exceed the last rent times 1.02, plus any yearly updates the previous landlord didn’t use in the last 3 years. Up to 15% a year more is allowed after major renovation certified by the town hall. It applies only to rents above the general rent limits set by Portaria 176/2019. The reform bill would end this cap
• Extraordinary rent support: up to €200 a month, paid automatically, for households paying 35% or more of their income in rent, with income up to the 6th IRS bracket (€43,090 in 2026). It only covers leases signed by 15 March 2023, so most newcomers won’t qualify. It is planned until 31 December 2028, though the Government said in February 2026 it means to replace it
• Disputes: it created the Balcão do Arrendatário e do Senhorio (BAS), the tenant and landlord desk that handles eviction and rent claims

Getting your caução back

The caução is capped at 2 months’ rent, and advance rent at 2 months with a written agreement. The landlord holds it, so start collecting evidence early.

1. Find the inventory and photos from move-in, and photograph every room again before you hand back the keys
2. Repair damage you caused, such as holes for shelves. Normal wear and tear isn’t your cost
3. The landlord can deduct unpaid rent, unpaid bills that were yours, and repairs beyond normal wear, and should show proof of the damage and the cost
4. Ask for the balance and a receipt (recibo de quitação) when you hand back the keys. If it doesn’t come, write to the landlord, then get advice from a lawyer or a consumer organisation such as DECO PROteste

Rent support and tax relief

• Porta 65 Jovem: a monthly subsidy worth a share of the rent, for tenants aged 18 to 35 renting their permanent home (one of a couple can be 37 if the other is 35 or under). You can apply before you have a lease and then have 2 months to sign one. Rent can’t be more than 60% of household income, and income is capped at 4 times the minimum wage. Foreign residents are asked for proof of their right to live in Portugal. Rooms aren’t eligible
• IRS rent deduction: tax residents can deduct 15% of rent on a registered lease for their permanent home, up to €900 for 2026 and €1,000 from 2027, more on lower incomes. Ask the landlord to issue electronic rent receipts. See How much tax will I pay in Portugal?

Staying or moving: the real cost

A new lease usually means the first month, a caução of up to 2 months and often a month or two in advance, while your old caução may take time to come back. On a typical two-bedroom flat:

Add removals, reconnecting electricity, water and internet, and any overlap in rent. The moving fund calculator adds it up. For the search and the contract itself, see finding a place to rent and renting in Portugal; for buying instead, buying a home.