Annual rent update coefficient for 2025

What 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 effect, the rent may be updated annually in line with the applicable update coefficients.

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

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

What annual update coefficient will apply in 2025?

On October 18, 2024, Notice 23099/2024/2 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 2025 is 1.0216.

Based on the above, we conclude that:

• if there is no specific provision or express agreement regarding the update conditions, rents for 2025 may be updated based on the legal update coefficient set by Notice 23099/2024/2, resulting in an increase of 2.16%; and
• this coefficient represents a significant decrease from the previous year’s coefficient, which resulted in a 6.94% increase in rents in 2024.

Conclusion:

Based on the above, we conclude that:

• If there is no specific provision or express agreement regarding the update conditions, rents for 2025 may be updated based on the legal update coefficient set by Notice 23099/2024/2, resulting in an increase of 1.16%; and
• This coefficient represents a significant decrease from the previous year's coefficient, which resulted in a 6.94% increase in rents in 2024. 

[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).