The changes are part of a wider reform of Portugal's urban rental rules approved by the Government and sent to Parliament. The measures still need parliamentary approval before they can come into force.

Under the proposal, landlords would be able to end open-ended rental contracts when extensive renovation or restoration work means the property has to be vacated. The notice period would be reduced from the current five years to three years.

Statistical indicators

The Government also wants to change the way major renovation or restoration work is defined. Instead of relying on the existing planning and administrative criteria, the new system would take into account the cost of the work, calculated using statistical indicators.

Changes are also proposed for compensation and rehousing when tenants must leave their homes due to this type of work.

Landlords and tenants would be able to agree on either financial compensation or alternative accommodation. Under the proposal, compensation would equal two years' rent, replacing the current minimum amount tied to the property's taxable value.

If the two sides agree on rehousing, the landlord would have to provide alternative accommodation under similar conditions to the tenant's existing home. This would include factors such as location, rent, associated charges and the remaining duration of the rental agreement.

The period available for landlords and tenants to reach an agreement would also be reduced from 60 to 30 days. If no agreement is reached, compensation equivalent to at least two years' rent would apply.

Rental reform

The proposal maintains additional protection for older and more vulnerable tenants. Where a tenant is aged 65 or over, or has a certified disability of more than 60%, suitable alternative accommodation must be provided if an agreement between the two parties cannot be reached. A new open-ended rental contract would then have to be signed.

The proposed rules also cover situations in which tenants need to temporarily leave their homes while work is carried out to maintain the property.

In these cases, landlords could require tenants to move out for the period necessary to complete the work, up to a maximum of 180 days. Tenants would have to receive at least three months' notice before temporarily leaving the property.

The changes form part of a much wider overhaul of Portugal's rental market. The Government has said its aim is to increase the number of homes available for rent and give landlords greater confidence in putting properties on the market, while maintaining safeguards for vulnerable tenants.

Other measures included in the wider rental reform address issues such as late rent payments, deposits, advance rent payments, contract renewals, and older rental contracts.

The proposed changes concerning the termination of rental contracts have been submitted to Parliament and are therefore not yet in force.