Renting a House in Portugal: Everything You Need to Know (Focus on Cascais)

In this article, we will cover everything you need to know about renting a house in Portugal, focusing on Cascais: from the duration of the contract and security deposit to inspections, expenses, contract termination, and of course, average rental prices in Cascais.

Rental Contracts: Priority to Long-Term

One of the first aspects that stand out in the Portuguese rental market is the preference for long-term contracts. While there are short-term options, especially in tourist areas, stability is a valued aspect by both tenants and landlords. Standard contracts last from one to five years, with renewal options. This custom reflects a search for security and stability, allowing both parties to establish lasting relationships.

Renewal of the Rental Contract

• Contracts for permanent housing with a duration of less than three years automatically renew for a minimum of three years, unless the landlord needs the house for themselves or family members.
• Contracts with a duration of more than three years renew for successive periods of equal duration.

Security Deposit and Guarantors

The security deposit (caução) is a common practice in Portugal, usually equivalent to one or two months' rent. This amount is used as a guarantee against damages or non-compliance and is returned to the tenant at the end of the contract if there are no grounds for deductions. The deposit remains with the property owner until the end of the contract and must be returned when the property is handed over in the same condition it was rented. It is important to know that the deposit and rent advance are different, and the landlord may require both.

In addition to the deposit, many landlords also request a guarantor, a person who assumes financial responsibility for the lease if the tenant cannot meet the payments. The involvement of guarantors gives the creditor, or landlord, greater security and confidence. If, for any reason, the main debtor fails to pay, the guarantor will be called to fulfill that obligation. This practice is common in Portugal, especially for young tenants or those without a rental history.

It is also possible to prepay up to two months' rent by written agreement.

Negotiations and Flexibility

Despite the formal structure of the Portuguese real estate market, there is room for negotiation. This can include the rent amount, the duration of the contract, or specific conditions such as permission for pets or the inclusion of furniture. The key is open communication and setting clear expectations between both parties from the start.

Necessary Documents for Renting

• Documents and Identification: Valid passport, citizen card, or residence permit;
• Proof of Means of Subsistence: Last tax return, proof of payments (or pay slips), proof of investments, and other documents that may be requested;
• NIF (Tax Identification Number).

Registration and Legalities

Registering the rental contract with the Tax Authority is mandatory in Portugal. This registration formalizes the agreement, ensuring that both tenants and landlords are protected by Portuguese law. Additionally, this procedure is essential to guarantee the contract's legality and its acceptance by the country's tax system.

It is the landlord's responsibility to register the contract with the Tax Authority, but the tenant can do so if the landlord does not. The same applies to the sublessor in the case of subleasing.

Inspections

An inspection is conducted at the beginning and end of the rental contract to document the property's condition. Before moving into a new home, a detailed review of the property is customary. This inspection ensures that all property conditions are as agreed, avoiding unpleasant surprises. It is also an opportunity to discuss and document any necessary repairs or maintenance before moving in.

Expenses

Utility expenses (water, electricity, gas) are generally the tenant's responsibility. It is important to check with the landlord which expenses are included in the rent and which are your responsibility.

Rent Increases

Rent can be increased annually according to the Consumer Price Index (CPI). The landlord must notify the tenant of the rent increase in advance.

Contract Termination

The tenant can terminate the rental contract at any time by giving prior notice to the landlord. The notice period varies according to the duration of the contract:

• Legal deadlines for terminating a fixed-term contract by the tenant (or opposing renewal):
  • 6 years or more: 120 days
  • 1 to 6 years: 90 days
  • 6 months to 1 year: 60 days
  • Less than 6 months: 1/3 of the initial or renewal period

After one-third of the initial period (or renewal), the tenant can terminate with:

• 120 days' notice for contracts of one year or more
• 60 days' notice for contracts of less than one year

Late Payment Compensation to the Landlord

Rent is due on the first business day of each month, but it is common to allow until the 8th. After that, if the tenant is late, the compensation to the landlord is 20% of the amount due. If the situation persists and there are guarantors, the landlord has 90 days after the delay to notify them of the outstanding amounts.

Registered Letter for Landlord to Terminate Contract Due to Delay

The landlord can terminate the contract if the rent is more than eight days late for more than four times (consecutive or not) within 12 months, but they must inform the tenant by registered letter with acknowledgment of receipt after the third month of delay, stating their intention to terminate the lease.

Average Rental Prices in Cascais

• Studios and 1-Bedroom Apartments: Ideal for singles or couples, prices can range from €800 to €1,200 per month, depending on location and amenities.
• 2 and 3-Bedroom Apartments: Perfect for families, rents range between €1,200 and €2,500, with properties closer to the coast or with better finishes reaching the upper limit of this range.
• Houses and Villas: For those seeking more space or privacy, prices start around €2,500 and can reach €5,000 or more, especially if located in prime areas or with stunning views.

Tips

• Budgeting: Calculate the impact of rent on your family budget. The rent burden, including rent, should not exceed 35 percent of monthly income. To reduce this burden, consider sharing the house with someone or renting a room, as these are more affordable options.
• Furnished or Unfurnished: If you furnish the house from scratch, add this initial cost to your expenses. Renting a furnished property can be more practical, especially for short-term rentals, but it has a disadvantage: the landlord may charge a higher price.

Ready to start your adventure in Cascais? Contact RE/MAX Cidadela today.
Avenida 25 de Abril 722, C-9, Cascais or Avenida 25  de Abril 890, Cascais,
+351 214826710,    ppettermann@remax.pt

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By Pedro Pettermann and Sol deAlós

Brokers at RE/MAX Cidadela  in Cascais and Lisbon since 2004

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