Government alters strategy over rentals price cap

Cap to return to ‘line of inflation’; support ‘only for those who need it’

The government is preparing a new strategy when it comes to ‘reducing rental increases’.

According to tabloid Correio da Manhã, the PS Socialist executive will NOT be capping the amount by which landlords can increase rents in 2024, contrary to policy this year.

Instead, it will be offering support to tenants that can show they need it – and leaving landlords free to increase rents in line with inflation.

This means that some rental increases could reach the 6.94% recently touted.

The argument here is that certain tenants can afford these increases. Also, the government is loathe to continue with a policy that can (and reportedly has already) sent landlords scuttling (certainly removing properties from the declared rentals market).

As the prime minister said in an interview earlier this month: “We cannot say on the one hand that we want to give confidence to home owners to place their properties on the rental market and then every year adopt measures that erode that confidence”.

The new strategy is expected to be approved, in principle, by the end of this month, says CM.

The solution “implies that rentals could increase next year up to a maximum of 6.94%, in line with inflation, contrary to the solution adopted this year. In 2023, as a result of the level of inflation, rent increases could have gone up to a maximum of 5.43%, but the executive decided to limit them to 2%. The measure benefited all tenants, independent of the value of the rent, or the property”.

Not surprisingly, ANP (the national association of property owners) supports the plan, while AIL (the association of Lisbon tenants) wishes there was a limit on possible increases as it is painfully aware of so many situations where tenants are paying more than half their available income on keeping a roof over their heads.

‘Exorbitant rental prices’ have been a theme running through the press, along with multiple stories on Portugal’s housing crisis, but as CM explains today – using data from the 2021 Census (which admittedly will be out of date) – only 2% of long-term rentals in Portugal refer to properties where the rent is over €1,000 a month. The vast majority of contracts (922,921) see rents of roughly €334; 40% are in the region of between €200-€399; 21% between €400 and €649.99, and 6% between €650-€999.00.

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