In accordance with a statement from the Council of Ministers, the decree-law was approved which “establishes the compensation for landlords, up to the limit of 1/15 of the Patrimonial Tax Value of the leased property, for rental contracts of housing concluded before November 18, 1990, additionally these contracts will not be subjected to the New Urban Lease Regime”.

On Tuesday, associations of owners and tenants reported that the National Housing Council, granted the compensation to landlords with rents prior to 1990.

On 22 November, a study on rental contracts not subject to the New Urban Lease Regime (NRAU) had been released by the Institute of Housing and Urban Rehabilitation (IHRU) together with the report on Housing Leases in Portugal. Aimed to characterise the number of families with so-called old incomes (before 1990) and contribute to estimating the amounts necessary to provide support for this type of contracts.

The document presented the calculations of various scenarios, depending on the measures included in the legislation: the More Housing package and the decree-law that in 2015 recommended that the subsidy to be granted to the tenants with lower income, older people or those with disabilities, after the end of the transitional regime.

As maintained by the study, the foreseen value of support for the More Housing package that went into action in October this year, halts the transition to the NRAU of old housing rents, that would be higher or lower depending on the solution to be adopted.

Data points to the existence of 124,083 housing rental contracts prior to 1990 (in total there are 151,620, form which the 27,537 accommodations that are owned by a public entity or non-profit organisation were not included), compensation could amount to a monthly expense of €54.5 million or €653 million per year, assuming that it corresponds to the difference between the average value of current rents and a rent defined based on the average value per square meter of new lease contracts.

If this methodology were to be applied, but considering a ceiling of 80 percent to the median square value of new lease contracts (published by the National Institute of Statistics), the monthly expense with this measure would be €39.8 million (€477.8 per year).

The study also considered another scenario, taking into account the provisions of the More Housing diploma, the monthly cost would amount to €2.2 million per month (€26.6 million per yer).

In this second scenario, the value was calculated assuming that the tenant pays rent in accordance with the effort rates provided by the law (based on the adjusted annual income – RABC of the household) and compensation for the remainder for 1/15th of the tax asset value of the house, when it could be higher.

This study, which was scheduled to be carried out in the State Budget for 2022, was elaboratd by the Housing Leasing and Urban Rehabilitation Observatory (OHARU), through a partnership between PlanPP, in collaboration with INE and the Tax and Customs Authority (AT).