Lisbon.- The Government of Portugal has approved a major reform of the rental market aimed at increasing the supply of housing and restoring confidence to landlords, an initiative that will be accompanied by the creation of an Emergency Housing Fund with which the State will provide support to families in vulnerable situations.
The measures were approved at the Council of Ministers held yesterday, Thursday, and detailed this Friday by the Executive, which presented them as two pillars of the same strategy: liberalizing the rental market to increase the housing supply and, at the same time, strengthening social protection for people who may be affected by the loss of their home.
The Government did not specify the initial financial endowment of the new fund nor the date on which it will begin granting aid. In February 2025, the Minister of Infrastructure and Housing, Miguel Pinto Luz, had estimated the budget for a housing emergency fund provided for in the 2024 Budget at around 100 million euros, although the Executive has not clarified whether that figure remains for the instrument approved now.
The reform of the urban lease regime aims to increase the number of homes available for rent through greater contractual freedom between landlords and tenants. According to the Government, more than 250,000 homes currently remain empty due to legal uncertainty which, in its view, discourages many owners from putting them on the market. Portugal has around one million rental homes, a significant portion of which are subject to old contracts with reduced rents.
Streamlining evictions for non-payment of rent
Among the main new features are the elimination of limitations on updating rents between contracts, the relaxation of conditions regarding deposits and advance payments, the simplification of communications between landlords and tenants, and the acceleration of eviction and dispute resolution procedures.
The proposal will also allow landlords to object to the first automatic renewal of a contract and will reduce from three to two months the period of non-payment required to initiate an eviction procedure, in addition to facilitating the termination of the contract in cases of repeated delays in rent payment.
The Executive branch asserts, however, that the reform maintains specific protection mechanisms for the elderly, citizens with disabilities, and economically vulnerable households.
As a counterbalance to market liberalization, the Council of Ministers approved the creation of the Emergency Housing Fund, intended to finance the relocation of individuals and families who lose their homes due to causes such as evictions motivated by economic difficulties or situations of domestic violence.
The fund will grant direct non-reimbursable aid to facilitate temporary or permanent housing and aims to guarantee an immediate response in housing emergency situations.
According to the Government, with this mechanism it will be the State, and not the owners, who assumes the social cost of these extraordinary situations, with the aim of protecting the most vulnerable groups without compromising the functioning of the rental market.
Housing has become one of the main social and political problems in Portugal. Rents for new contracts have almost doubled since 2017, while the sharp increase in purchase and rental prices, especially in Lisbon and Porto, has made access to housing difficult for a growing part of the population.
The reform must now be debated and approved by Parliament, where the center-right Executive, which governs in the minority, will need the support of at least one of the main opposition parties to push the bill forward.
The reform comes at a time when Portugal is going through one of the biggest housing access crises in Europe. According to the Government, around 250,000 homes remain empty because many owners prefer not to rent them out due to legal uncertainty, while the country has nearly one million rented homes, many of them subject to old contracts with low rents.
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At the same time, the rise in housing costs has accelerated in recent years. Rents for new contracts have almost doubled since 2017, while housing prices increased by 17.8% year-on-year in the first quarter of 2026, the highest increase recorded among European Union countries.
