🇵🇹🇺🇸 A Technical Guide to Residential Lease Agreements in Portugal

Por

 

Legal Framework, Procedural Requirements, Rights & Obligations for Foreign Tenants

(Prepared by Ulisses Carvalho for international residents relocating to Portugal)

1. Legal Framework

Residential lease agreements in Portugal are governed by:

  • Civil Code – Articles 1022 to 1113

  • NRAU – Novo Regime do Arrendamento Urbano (Urban Lease Regime)

  • Lei n.º 6/2006 and subsequent amendments

  • Portaria n.º 98-A/2015 (Contract registration rules)

  • Municipal regulations regarding habitation licenses (Licença de Utilização)

All lease agreements — whether involving Portuguese or foreign tenants — must comply with the same legal standards.

2. Who Can Rent Property in Portugal

Foreign nationals can legally rent property in Portugal even if they:

  • are not residents yet

  • have no Portuguese address

  • have no Portuguese bank account (although it is recommended)

Required documents:

  • Passport

  • NIF (Portuguese Tax Number)

  • Proof of income (U.S. bank statements, pension, employment contract, SSA statements, etc.)

3. Mandatory Elements of a Valid Lease Agreement

A Portuguese lease contract (contrato de arrendamento) must contain:

  1. Identification of landlord and tenant

  2. Address and description of the property

  3. Licença de Utilização (habitability certificate)

  4. Monthly rent amount and payment method

  5. Contract duration (fixed-term or open-ended)

  6. Date of entry into possession

  7. Security deposit (caução) and other guarantees (fiadores / guarantors)

  8. Responsibilities for utilities & maintenance

  9. Conditions of renewal and termination

  10. Inventory list, if applicable

  11. Indication of whether the contract will be registered for tax purposes

Important: By law, the property must have a valid habitation license for the landlord to issue a legal lease.

4. Registration and Tax Compliance

Landlords must:

  • Declare the lease electronically on the Portuguese Tax Portal within 30 days - IRS Mod. 2

  • Issue monthly electronic rent receipts (recibos eletrónicos)

  • Pay tax on the rental income

Tenants do not pay tax — but they should keep the receipts for proof of payment and address confirmation.

5. Security Deposit vs U.S. “Security Deposit”

In Portugal the caução (security deposit) is:

  • Not capped by law (though 1–2 months is typical)

  • Held by the landlord (not in escrow — this is a major difference from the U.S.)

  • Returned at the end of the lease minus damages (if applicable) - 

  • Not automatically used as “last month’s rent” unless agreed in writing

  • Article 1076 of the Portuguese Civil Code.

    Under this article:

    • A security deposit (caução) is allowed, but it must be explicitly included in the rental contract. There is no automatic or default deposit unless the contract states it.

    • The deposit serves as a guarantee for the tenant’s obligations: rent payment, proper maintenance of the property, and fulfilment of contractual terms.

    • At the end of the lease, the landlord must return the deposit if:

      • the rent is fully paid,

      • the property is returned in good condition (normal wear and tear accepted),

      • and there are no outstanding contractual obligations.

No government entity holds or guarantees the deposit.

6. Advance Rent (Renda Antecipada)

Some landlords require:

  • 1–2 months’ advance rent in addition to the deposit

  • Sometimes a guarantor (fiador) with Portuguese income

This is normal in the Portuguese market and not illegal.

7. Rights and Obligations of Tenants

Tenant Rights

  • Quiet enjoyment of the property

  • Protection against unlawful eviction

  • Right to receive electronic receipts

  • Property must be delivered in good habitable condition

  • Rent increases limited by government annual coefficient

  • Landlord may not enter without permission

Tenant Obligations

  • Pay rent on time

  • Use the property responsibly

  • Inform landlord of necessary repairs

  • Maintain cleanliness and avoid damage

  • Not sublet without written permission

8. Responsibilities for Repairs

Portuguese law distinguishes:

Landlord responsibilities:

  • Structural integrity

  • Electrical system (when not misuse)

  • Plumbing, water heaters, major appliances provided with the property

  • Roof, dampness, humidity issues

  • Ensuring the property remains habitable

Tenant responsibilities:

  • Minor repairs

  • Damage resulting from misuse

  • Replacing consumables (light bulbs, batteries, etc.)

9. Rent Increases

Yearly rent increases follow the official inflation-based coefficient published by the Portuguese Government (usually between 2–7%).

Landlords cannot increase rent arbitrarily.

10. Contract Types & Duration

Fixed-term contract (prazo certo)

  • Most common

  • Minimum: 1 year

  • Automatically renews unless notice is given

  • Landlord must give 120–360 days’ notice depending on contract length

  • Tenant can terminate sooner (see below)

Open-ended contract (duração indeterminada)

  • Less common

  • Stronger protection for tenants

  • Landlords have very limited reasons to terminate

11. Termination Rules

Tenant termination

Tenants may terminate a fixed-term lease after 1/3 of its duration has passed, giving:

  • 120 days’ notice for contracts longer than 1 year

  • 60 days’ notice for contracts under 1 year

This is much more strict compared with many U.S. states.

Landlord termination

Landlords may only terminate at contract expiry and must justify:

  • Personal occupancy

  • Reconstruction requiring vacancy

  • Non-payment or breach of contract

Evictions require court proceedings — Portugal strongly protects tenants.

12. Utilities & Expenses

Unless stated otherwise:

  • Tenant pays utilities (electricity, water, gas, TV/Internet)

  • Condominium fees are usually paid by the landlord

  • Property tax (IMI) is always the landlord's responsibility

13. Prohibited Clauses

Portuguese law prohibits landlords from inserting:

  • Clauses allowing eviction without judicial process

  • Clauses requiring tenant to waive legal rights

  • Penalties disproportionate to rent

  • Clauses preventing visitors

  • Clauses restricting marital status or nationality

Such clauses are null and void even if signed.

14. Common Differences vs the U.S.

PortugalUnited States
Deposit not held in escrowOften held in regulated escrow accounts
Rent receipts mandatoryReceipts vary by state
Evictions require courtEviction processes vary and can be quicker
Contract must be registeredRegistration generally not required
Notaries are licensed attorneysU.S. notaries are not lawyers
Rent increases regulatedDepends entirely on state/city
Strong tenant protectionVaries widely

15. Frequent Scams & How to Avoid Them

  • “Airbnb-style” rentals offered as legal long-term leases

  • Landlords refusing to issue receipts

  • Demand for excessive advance payments (3–6 months)

  • Contracts not registered with Finanças

  • Illegal sublets

  • Properties without habitation license

Foreign tenants should always ask:

  1. Licença de Utilização (or it's validation by a Realtor)

  2. Contract draft

  3. Proof of landlord ownership (validated by a Realtor)

  4. VAT number (NIF)

  5. Confirmation that electronic receipts will be issued - Mod. 2 IRS

16. Best Practices for Expats

  • Never pay deposit before visiting the property

  • Prefer bank transfer to cash

  • Always request electronic rent receipts

  • Keep communications in writing

  • Confirm notice periods in the contract

  • Verify whether appliances and furniture are included

  • Confirm that utilities are switched to the tenant’s name

Conclusion

Portugal’s rental system is transparent, predictable, and highly regulated, but very different from the U.S. model, particularly regarding deposits, contract registration, eviction procedures, and rent increases. Foreign tenants benefit from strong legal protection, provided the contract follows the NRAU and is properly registered.

Comentários

Enviar um comentário