Rents to increase by 7%

Rents in Portugal are projected to increase by 7% because of inflation which has gone up to 3.7% (+0.6%) and an update on rents which for housing reflected 6.94% in August.

It means that if landlords agree, rents could go up by as much as 7% with the government not ruling out fixing rent increases as it did earlier this year when it introduced a cap on rent hikes of 2%.
Inflation is used a baseline to calculate a coefficient to update annual rents for a range of rental properties, including for housing, where it was fixed at 6.94% according to data from the statistics institute INE. The final figure will be known on September 12.
Portugal’s Civil Code determines that the coefficient used to calculate rents is based on the consumer price index for the previous 12 months.
In July, the Ministry of Housing stated that the “government is following data developments” and that the “government will keep an eye on the matter until definitive figures are released.”
In practice it means that a current rent of €500 per month will go up to €534,70, while a rent of €1000 will become €1069.40.
The General Secretary of the Lisbon Tenants Association (AIL), António Machado told the online news service ECO that if rents went up by 7% from January the situation would be a calamity and that it could not accept the update in rents forecast by the INE.
On the other hand, the Lisbon Landlords Association says that there is no justification to cap rents from being increased in line with inflation and it could kill off the rental market if the government does.
The President of the association, Luís Menezes Leitão said that the government had never tried to cap rents even in 1985 when Portugal had suffered even higher levels of inflation.

Photo AIL: The Lisbon Tenants Association (AIL) has been calling for rent caps for some months.