The Decree-Laws No. 42/2017 and 43/2017, both of 14 June, were approved, which introduce changes to the New Urban Lease Regime (“Novo Regime de Arrendamento Urbano” - NRAU), the Legal Regime of Works in Rented Buildings (“Regime Jurídico das Obras em Prédios Arrendados” - RJOPA) and Civil Code related to lease.
With regard to the NRAU, we highlight the extension for eight years (plus three years in relation to the five years initially established) of the transitional period for updating old rents.
To this extent, the transitional period for updating rent from pre-1990 agreements will be extended to 2020 and applies to all lessees Adjusted Annual Gross Income (“Rendimento Anual Bruto Corrigido” - RABC) less than five Annual Minimum National Retributions (“Retribuições Mínimas Nacionais Anuais” - RMNA) - the equivalent to EUR 38,990.00 (thirty-eight thousand nine-hundred and ninety Euros) – regardless of age.
Thus, the landlord can only promote the transition of the agreement to the NRAU "after eight years". At the end of this period, "in the silence or in the absence of agreement of the parties on the type or the duration of the contract, it shall be deemed to have been concluded for a period of five years."
A note on lessees aged 65 years or older or disabled with 60% or more, which the household's RABC is less than five RMNAs: the NRAU application period is extended by 10 years.
With respect to RJOPA, the Decree defines as works of deep remodeling or restoration the works whose "cost of the work to be carried out on the leased, including value added tax, corresponds to at least 25% of its tax asset value in the lease asset’s matrix or proportionally calculated, if that value does not concern exclusively to the leased asset".
Regarding the termination of the agreement, the eviction occurs within 60 days of confirmation’s receipt and the lessees are entitled to compensation that "must be paid 50% after the termination has been completed and the remainder upon delivery of the leased asset, under penalty of not producing effect."
In the Civil Code, it should be noted the increase of the period of concluding lease agreement - from two to five years - and of the period of tolerance due to non-payment of rent.
The housing lease agreement can be concluded with a fixed term or for an indefinite duration, and in the first case “it may be agreed that, after the first renewal, the lease agreement has an indefinite duration. In the silence of the parties, the agreement is deemed to be concluded with a fixed term, for a period of five years".
Lastly, the grace period for nonpayment of the rent is increased from two to three months, establishing that "it is unenforceable for the landlord to maintain the lease agreement in the event of default of more than three months in the payment of rent, charges or expenses incurred by the lessee".