Criteria that will limit rent increases in new contracts will only apply if the new landlord’s offer exceeds the maximum amounts for each type stipulated in the Affordable Rent (PAA) program.
The measure is part of a bill that supports the Mais Habitação program, which the government recently sent to Parliament and reflects one of the amendments to the version approved on February 16 and which was in public consultation until the last few days of March.
Among the measures aimed at combating speculation in the price of rent, the Government has included a restriction on the increase in the cost of new lease agreements for objects leased out within the last five years.
To this end, it is provided that the landlord may add 2% to the value of the last rent paid by the landlord (when performing a new contract), as well as to the cost of annual rent renewals that arise from the law. tested within the previous three years and not applied.
The limits come into effect with the new law, but a proposal sent by the Government for discussion and approval by Parliament specifies that the rent rules in the new leases apply “to contracts that exceed the general rent limits of the typology provided for in paragraph a) of paragraph 1 article 10 of Decree-Law no.
In practice, this means that if, due to the location and typology of the PAA criteria, the rent for a property can be 800 euros, but is rented for 400 euros, these rent limits increase (2% and the last 3 yearly renewal) do not apply if the landlord signs a new contract.
Keep in mind that this PAA (the use of which exempts landlords from the IRS on rent) sets the maximum rents that can be charged based on location and type of property.
In the 2023-2027 Stability Program (SP) released earlier this week, the government estimates a €45 million loss in IRS revenue due to this cap on rent increases during 2024.
The tax costs associated with Mais Habitação, namely in connection with the expected tax incentives, in turn, are estimated at 110 million euros per year in the horizon of 2024-2027.
Mais Habitação’s tax credits include an IRS exemption for homes that leave local housing and enter the rental market, or tax exemption for capital gains from the sale of real estate to pay off loans to buy or build your own home and permanent.
Author: Portuguese
Source: CM Jornal
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