Annual rent update coefficient for 2024

2023-10-31T09:49:00
Portugal
Notice 20980-A/2023 establishes that the annual rent update coefficient for the various kinds of leases in 2024 is 1.0694.
Annual rent update coefficient for 2024
October 31, 2023
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What exactly is the rent update mechanism?

As a rule,[1] parties to a lease agreement are free to agree on the conditions for updating the rent in the lease. If there is no provision or express agreement of the parties to this affect, the rent may be updated annually in line with the applicable update coefficients.

The law establishes[2] that the annual rent update coefficient for land and building leases derives from the total variation in the consumer price index—excluding housing—for the past 12 months and for which figures are available on August 31.

The National Statistics Institute is responsible for ascertaining this update coefficient, and the pertinent notice must be published in the Official Gazette of the Republic of Portugal (“Official Gazette”) by October 30 each year.

What annual update coefficient will apply in 2024?

On October 30, 2023, Notice 20980-A/2023 was published in the Official Gazette (Series II, Part C). It establishes that the annual rent update coefficient for the various kinds of leases in 2024 is 1.0694. 

Therefore, if there is no specific provision or express agreement regarding the update conditions, rents for 2024 can be updated based on the legal update coefficient set by Notice 20980-A/2023, resulting in an increase of 6.94%.

Is there any kind of extraordinary cap on rent updates for 2024? Is there any established or increased support for tenants?

While no extraordinary rent update coefficient or mechanism[3] has been established for 2024, the government did announce in the Council of Ministers Press Release of October 26, 2023, that it has approved a decree-law that will amend the extraordinary rent payment support for families. This decree-law is waiting to be signed into law and published in the Official Gazette.

Based on the above, we conclude that:

  • no capping mechanism similar to the one established for rents for 2023 under Law 19/2022 of October 21 has been approved for rents for 2024;
  • if there is no specific provision or express agreement regarding the coefficient update conditions, rents for 2024 may be updated in line with the legal update coefficient of 6.94%; and
  • to alleviate the rise in the annual rent update coefficient, the government has approved a decree-law that amends the extraordinary rent payment support for families, meaning extraordinary rent support for residential leases will be provided under certain conditions.

[1] See article 1077 of the Portuguese Civil Code.

[2] See article 24 of Law 6/2006 of February 27, which approves the New Building Lease Regime (NBLR); and article 11.5 of Decree-Law 294/2009 of October 13, which approves the New Land Lease Regime (NLLR).

[3] Last year, an extraordinary rent update coefficient capped at 2% was established for 2023, and the coefficient based on the consumer price index—excluding housing—for the past 12 months did not apply.

 

October 31, 2023