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Pre-1980 Rents to Go Up by 1.12%

3 January 2018

Landlords with lease agreements that were signed between 1966 and 1979 can raise rents by 1.12%; the same increase was given to contracts signed after those dates.

The permitted monetary correction applicable to housing rental contracts signed prior to January 1, 1980, is set by federal decree in Portugal and was published this Wednesday in the Diário da República, the official gazette of the Portuguese government.

The permitted coefficient, which will be multiplied by the value of the rent, was set at 1.0112 for contracts signed in the period between 1966 and 1979. For the contracts signed in the years to 1965, the coefficient varies to a certain point based on the building’s characteristics, namely if it has a lift or a manned gate.

In relation to contracts signed prior to 1980, which have already been renegotiated, and where tenants have claimed economic incapacity, disability or are persons over the age of 65, a further increase in rents based on inflation may only be instituted after a period of transition, which was extended from five to ten years, from the date of the renegotiation.

In the remaining older contracts that had already been renegotiated, rents can be updated one year after the last price correction.

The update in 2018 was determined by the final value of the Consumer Price Index (CPI), ex-housing, which was fixed in August at 1.12%, corresponding to roughly twice last year’s increase of 0.54%.

The permitted increase set in August 2015 was set at 0.16% and served as the basis for rent corrections in 2016, prompting some landlords to forgo the rise. The inflation rate in August 2014 was negative, with no corresponding increase in rents.

In 2014, the permitted correction was fixed at 0.99%, much less than the 3.36% in 2013 and 3.19% in 2012. In 2011 it stood at 0.3% and in 2010, at zero.

The impact of a 1.12% increase on a rent of 300 euros per month is 3.36 euros, reaching 6.72 euros for a rent of 600 euros. In the so-called older rents, of significantly lower value, the impact is less.

Original Story: Público – Rosa Soares

Photo: Fau Fabio Augusto

Translation: Richard Turner