Rental Contract Setup: What Should Homeowners Include in a Lease Agreement in Portugal

Whether you're renting out a property for the first time or revising an existing lease, here’s a guide on what to include in a Portuguese rental agreement.

‍Note: By law, all contracts must be drafted by a lawyer. An exception applies if you are creating a contract solely for your personal use; however, we would not recommend doing so.

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1. Type of contracts

Permanent vs. transitional contracts:

Rental contracts for permanent housing (habitação permanente) must have a minimum term of one year, exist in written form (Civil Code Article 1069º), and be registered with Finanças. For transitional rentals (less than one year), the contract must specify its transitional purpose (fins transitórios), and it will not fulfill residency requirements for institutions like SEF.

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Fixed-term vs. Renewable contracts:

Fixed-term contracts end on the specified date, with no renewal obligation.

Renewable contracts are also fixed-term contracts, but renew automatically if no alternative period is specified. Under Portuguese law, this default period is a minimum of three years unless stated otherwise.

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2. Parties Involved

Landlord and Tenant Information: Clearly state the full names, nationalities, addresses, dates of birth, marital statuses, ID numbers, and Portuguese fiscal numbers (NIF), if available, of both the landlord and tenant. Including contact information is also recommended for efficient communication.

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3. Property Details

Mandatory documents

Make sure to include a reference to or the document number and details of the following documents related to the property in the rental contract:

• Caderneta Predial (Property Tax Document): Issued by the tax office (Finanças), this document can be downloaded from your personal area on the Finanças website (by searching for património predial after logging in). It provides the exact location of the property, its registration and identification information, its area in square meters, and, in some cases, the year of construction.
• Energy Certificate: Legally, any property intended for sale or rent must have a valid energy certificate. To obtain one, search online for certificado energético, where multiple providers are available to choose from.
• Licença de Utilização (Usage Licence): This document is required for properties built after 1951 or for properties that have undergone licensed renovations.

Other documents

‍These documents aren’t mandatory but may be requested by the real estate agent, potential tenant, or any lawyers involved in the contract negotiation.

• Certidão Predial (Property Registration Certificate): This certificate indicates the property’s ownership details, registration specifics, area, and the layout of rooms or sections. It helps interested parties perform due diligence on the property and its ownership status.
• Ficha Técnica (Technical Datasheet): Required for properties constructed after March 30, 2004, this datasheet contains technical information about the property’s construction.

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4. Lease Duration

Term of the Lease: Clearly outline the contract duration for the contract.

Normally the following differentiation is made:

1. long-term: longer than one year
2. mid-term: between 1 to 12 months
3. short-term: between 1 day to 30 days (Beware: for listings on Airbnb or booking.com, you may need the Alojamento Local license for your property)

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5. Cancellation Rights and Termination

A rental agreement is binding for both parties, but Portuguese law outlines specific circumstances and processes for terminating contracts. In the following, we explain the termination rules for landlords and tenants, as well as the notice periods required to avoid automatic renewal.

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Termination of the Lease Agreement By Landlord

In Portugal, landlords cannot unilaterally terminate a rental agreement without valid legal grounds. However, the following exceptions apply (Civil Code Articles 1097º, 1101º, 1102º):

1. With five years' notice: Landlords may terminate the lease with a minimum of five years' notice, provided this is stated in the contract.
2. Immediate housing need: If the landlord or their immediate family requires the property for personal use, the landlord can terminate the lease. However, this option is only available if the landlord has owned the property for more than two years. In such cases, the landlord must compensate the tenant with one year's rent.
3. Necessary renovations: If significant renovation work requires the property to be vacated, the landlord may terminate the agreement. Documentation proving the need for such renovations is usually required.

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Termination of the Lease Agreement By TenantTenants

generally have more flexibility to terminate a lease agreement. After fulfilling one-third of the contract term, tenants can cancel the agreement by providing written notice:

1. 120 days' notice for contracts lasting one year or more.
2. 60 days' notice for contracts under one year.

Example: A tenant with a one-year contract starting January 1, 2025, may cancel the lease after May 1, 2025. If they notify the landlord on that date, the lease will officially terminate on August 31.

Notice Periods for Renewable Contracts

If either party wishes to prevent a lease from renewing automatically, they must adhere to the following notice periods:

For Landlords

Landlords must notify tenants in writing within the following timeframes before the renewal date:

• 240 days for contracts with a term of six years or more.
• 120 days for contracts lasting one to six years.
• 60 days for contracts between six months and one year.
• One-third of the contract term for agreements under six months.

For TenantsTenants

must provide written notice within these timeframes to prevent renewal:

• One-third of the term for contracts under six months.
• 60 days for contracts between six months and one year.
• 90 days for contracts lasting one to six years.
• 120 days for contracts of six years or more.

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6. Rent and Payment Terms

Monthly Rent Amount: Clearly specify the monthly rent, due date, and acceptable payment methods. Usually, the rent is paid at the beginning of the month prior to the month it applies to.

Note: Landlords may legally adjust rent based on inflation rates published annually by the National Statistics Institute (INE) but must notify tenants by registered letter at least 30 days in advance. For 2024, the adjustment rate is 6.94%. For 2025, the rate is expected to be 2.16%.

Late Payment Penalties: According to the Civil Code, the landlord has the right to demand additionally to the rent another 20% of the entire rental amount that is due (Civil Code Article 1041).

Tip: Consider including a grace period for payments to accommodate unforeseen circumstances, while ensuring tenant accountability.

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7. Security Deposit

Amount and Terms: Typically, a security deposit is equivalent to two months' rent in Portugal, but might be higher, depending on the content of the apartment. Include details on how the deposit will be used, held, and returned at the lease’s end.

Conditions for Refunds: Explain conditions for the deposit return, such as the tenant’s responsibility for property cleanliness and the absence of damage beyond normal wear and tear.

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8. Maintenance and Repairs

Landlord and Tenant Responsibilities: Specify who is responsible for various types of maintenance and repairs. In Portugal, landlords usually cover structural repairs, while tenants handle minor upkeep like changing light bulbs.

Procedures for Reporting Issues: To streamline repairs, define how tenants should report issues and the landlord's expected response time.

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9. Furnishing and Appliances

Inventory of Furnishings: If the property is furnished, attach an inventory list of furniture, appliances, and their conditions at move-in.

Responsibilities for Damage: Include details on handling potential damage to furnishings, clarifying tenant responsibility for any non-standard repairs.

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10. Utility and Service Bills

Utilities (Electricity, Water, Gas): Specify which party is responsible for the payment of the utility expenses. In long-term rental agreements, the utility contracts are the responsibility of the tenant, who also pays for all related expenses.

However, different arrangements are possible. When the time horizon of the rental is more limited or the apartment comes fully furnished, the tenant usually reimburses the homeowner who set up the utility contracts in advance. In any case, this arrangement should be documented in the contract.

Internet and Other Services: Outline additional services (e.g., internet, TV) if provided, and any associated costs.

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11. Tenant Behavior and Use of Property

Permitted Use of Property: Specify that the property is strictly for residential purposes. Tenants are prohibited from using the property for commercial activities, subletting, or other non-residential purposes without prior written consent from the landlord.

Noise and Disturbances: Tenants must maintain a peaceful environment, respecting local laws that typically require quiet hours between 10 PM and 7 AM. Excessive noise or disruptive behavior during other times should also be avoided to ensure neighborly harmony.

Trash Collection: Provide tenants with clear guidelines on proper waste disposal, including collection schedules, separation of recyclables, and the use of designated bins. Non-compliance with local waste management regulations can lead to fines, for which the tenant will be held responsible.

Smoking: Clearly indicate whether smoking is allowed on the premises. If prohibited, specify whether this restriction includes outdoor areas such as balconies or gardens.

Parties and Gatherings: Tenants are encouraged to notify landlords of large gatherings in advance. Outline rules on frequency, maximum number of guests, and noise levels to prevent disturbances.

Pets: Specify the pet policy, including whether pets are allowed. If permitted, outline the types of pets, the number allowed, and the tenant’s responsibility for any damages or disturbances caused by their animals. Although landlords cannot forbid small pets, they do require prior approval. Consider including a clause for additional cleaning or damage fees.

Tip: Including detailed rules for tenant behavior in the rental contract ensures clarity, helps prevent disputes, and promotes a harmonious living experience for all parties involved.

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12. Subletting Policy

Subletting and Guests: Decide whether subletting or having long-term guests is permitted in your property or not. In Portugal, subletting typically requires the landlord’s written consent, which should be clarified in the lease.

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13. Insurance Requirements

Insurance Coverage: While landlords usually handle building insurance, tenants might consider renters’ insurance for personal belongings. Specify any insurance obligations for both parties. It is common practice to demand having a civil liability insurance from the tenant to cover potential damages, accidents, and liabilities that may arise during the tenancy, thereby protecting both the tenant and landlord financially.

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14. Legal Clauses and Compliance

In Portugal, residential rentals are governed by the Novo Regime de Arrendamento Urbano (NRAU) and the most current Portuguese Civil Code. While individual rental contracts can outline specific terms, any conflicts are subject to national law, which prevails in cases of illegal or abusive clauses. National legislation also covers contractual gaps, especially during cancellations or non-renewals, to clarify each party’s rights.

Governing Law: Clearly indicate that the agreement follows Portuguese tenancy laws, and outline how disputes will be managed, including the court of choice (usually the court of the local district).

Property Inspections: State whether routine inspections or visits will occur, along with proper notice terms for tenant privacy. This is essential to be outlined in case you are looking for a follow-up tenant or when selling the property.

Ensure both parties are familiar with Portuguese rental laws, as they provide additional protection for tenants, particularly in long-term leases.

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Final Steps: Signing the Lease

When finalizing your rental contract, ensure that both parties go over the lease details carefully and understand the meaning of all clauses. Signing the contract in person allows for any remaining questions to be clarified. Each party should receive a copy of the contract, signed on all pages, along with any relevant annexes like the inventory list.

Important: The owner is legally required to register the contract with Finanças and pay the applicable stamp duty (”imposto do selo”), which is 10% of one month’s rent. This registration can be completed online or in person. A rental receipt must be issued for each payment, including the security deposit, which can also be done online.

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Need More Help Managing Your Property?

If you're looking to rent out your property in Lisbon and want expert support in drafting contracts, tenant management, or comprehensive property services, we’re here to help. From selecting reliable tenants to overseeing every aspect of property upkeep, our property management services ensure your rental experience is hassle-free and professionally managed.

Interested in stress-free property management? Discover how our expert team can help secure your rental income and maintain your property in top condition. Contact us today to learn more!

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