Rent could rise 6.94% next year without government brake

The cost of rent could increase by 6.94% in 2024 if the government does not impose, as it did this year, a cap on updates, according to inflation data for August this Thursday released by the National Institute of Statistics (INE).

According to INE, in the last 12 months to August, the average price index change, excluding housing, was 6.94%, and this value serves as the basis for the coefficient used to update next year’s annual rent. , under the New Urban Renting Regime (NRAU), which is an additional 6.94 euros for every 100 euros of rent.

However, the actual updated rental value, applicable to both urban and rural areas, will only be determined on September 12, when INE will release final data with reference to the August 2023 IPC after publication in Diário of the Republic until September 30. October.

This year, given a renewal rate of 5.43% based on inflation figures until August 2022, the government decided to introduce a brake rule that limited rent renewal to a maximum of 2%, compensating landlords.

When asked by the ECO if it would repeat the rent cut in 2024, the Housing Department replied that “the government is monitoring the development of the data” and that “the question remains under analysis until final data is available.”

In 2022, rents increased by 0.43% after a freeze in 2021 (after a negative change in the price index) and an increase of 0.51% in 2020, 1.15% in 2019, 1.12% in 2018, 0.54% in 2017 and 0.16%. in 2016.

By law, rent values ​​are usually subject to annual renewal, which is automatically applied in line with inflation. The NRAU stipulates that the INE is responsible for determining the rent renewal factor, which must appear in a notice to be published in Diário da República by October 30 of each year in order to become effective.

Only after publication in Diário da República will landlords be able to announce the rent increase to tenants, and the increase can actually only take place 30 days after this notification.

According to the rental law, the first renewal may be required one year after the end of the contract, and subsequent renewals one year after the preliminary renewal, while the landlord must communicate in writing at least 30 days in advance the renewal coefficient and the new rent resulting from this calculation.

Landlords are not required to apply this update if they choose not to.

However, pre-1990 rents have been updated as of November 2012, according to the NRAU, allowing rent increases for older periods through negotiations between landlord and tenant. If they are subject to this unusual update mechanism, they are exempt from the new update.