Portugal launches reform to liberalise rental market, speed evictions

By Sergio Goncalves

LISBON, July 10 (Reuters) - Portugal's minority centre-right government has launched plans to speed evictions and bring forward the end of rent controls, prompting criticism from tenant groups who say the moves will deepen the housing crisis that the government aims to solve.

Housing Minister Miguel Pinto Luz said late on Thursday that the reform sought to promote contractual freedom and boost landlords' confidence in the rental market, "encouraging more property owners to bring homes onto the market".

The government estimates that more than 250,000 empty homes remain off the market due to what it describes as "deep legal uncertainty" that discourages owners from renting them out.

Portugal has around 1 million rented homes, but its rental market is dominated by ageing, low-rent contracts: more than 23% are over 20 years old and 13% over 40 years.

Antonio Machado, head of the Lisbon Tenants' Association (AIL), told Expresso that it was "not morally appropriate" to shorten eviction deadlines and argued that the proposed measures would do little to tackle Portugal's housing shortage.

Portugal faces one of Europe's worst housing crises, with new-lease rents almost doubling since 2017, becoming unaffordable for many Portuguese.

The reform speeds up evictions by cutting the rent arrears threshold from three months to two and allows evictions of tenants who repeatedly pay more than eight days late.

It clarifies that landlords can refuse the first automatic renewal of a lease.

It also brings forward by three years, to end-2026, the expiry of a rent-control measure limiting rent increases on new leases to 2% for properties rented out within the previous five years.

Higher-income tenants under 65 will gradually lose rent protections attached to low-rent pre-1990 leases, allowing rents to be updated based on the property's current value.

The government will send the bill to parliament for final approval, but it needs backing from either the Socialists or the anti-immigration, anti-establishment Chega party, neither of which has indicated how it will vote.

(Reporting by Sergio Goncalves; editing by Philippa Fletcher)