Portugal's Rental Rules Are Changing (But Not Yet): The 2026 Advance Rent and Deposit Reform Explained
What the July 2026 reform means for advance rent, security deposits and existing leases
“Portugal’s Government approved a rental reform on 9 July 2026, but the new three-month advance-rent rule and the proposed removal of the fixed deposit ceiling are not yet in force. For now, the current two-month limits still apply.”
A claim has been circulating that Portuguese landlords may now require up to three months' rent in advance and that the legal ceiling on security deposits has been removed. The claim is based on a genuine Government reform, but the word "now" is the problem.
On 9 July 2026, the Council of Ministers approved a package intended to give landlords and tenants more freedom to negotiate advance rent and deposits in future contracts. As of 17 July 2026, however, the final legislation had not been published in the Diário da República. That means Article 1076 of the Civil Code remains the operative rule.
At a glance
| Issue | Law in force now | Government-approved reform |
|---|---|---|
| Advance rent | Maximum two months, with written agreement. | Up to three months, by agreement, for future contracts. |
| Security deposit | Maximum equivalent to two rents. | Negotiable in the contract rather than fixed at the current two-rent ceiling. |
| Existing contracts | Continue under their agreed terms and current law. | No unilateral change to agreed rent, deposit or advance-payment terms. |
| Legal status | In force under Article 1076 of the Civil Code. | Approved by Government, but not yet published or operative as of 17 July 2026. |
1. What the current law allows
Article 1076 of the Portuguese Civil Code currently sets two separate limits. Advance rent may be agreed in writing for no more than two months, and security for the parties' obligations may be provided up to the value of two rents.
Advance rent and a security deposit are not the same thing. Advance rent pays for future occupancy. A deposit, commonly called a caução, secures obligations such as unpaid rent or damage and should be returned when it is no longer needed, subject to the contract and any valid deductions.
“The official Diário da República example says that a lease beginning on 1 January may involve payment of January, February and March at signing. January is the current month; only February and March count as the two advance months.”
This means a tenant can potentially be asked for the current month's rent, two future months' rent and a deposit of up to two rents at commencement. In total, that can equal five monthly rent amounts, even though only two are legally classified as advance rent.
2. What the Government approved on 9 July 2026
The Council of Ministers approved a wider rental-market reform intended to increase housing supply and restore confidence in the market. The Government's explanatory material describes greater contractual freedom for new leases.
Future contracts could allow rent to be paid up to three months in advance, provided the parties agree.
The deposit amount would be set in the contract, with the Government's material indicating a move away from the current fixed two-rent ceiling.
The agreed deposit could not be changed unilaterally during the contract.
Contracts already in force would keep their agreed terms.
The reform is therefore real. It would substantially reverse the 2023 change that reduced the advance-rent limit from three months to two and introduced the two-rent cap on security.
3. Why "landlords may now require" is misleading
Approval by the Council of Ministers is not the same as a rule already in force. The final legal instrument must be formally completed, published in the Diário da República and reach its stated commencement date. As of 17 July 2026, the official gazette showed no publication of this rental reform.
There is another wording issue: both the current rule and the announced reform rely on agreement. A landlord may propose particular terms for a new lease, and a prospective tenant may accept, reject or negotiate them. The announcement does not create a power to rewrite an existing contract unilaterally.
“The Portuguese Government has approved a reform intended to allow up to three months of advance rent and more freely negotiated deposits in future contracts. The change is not yet in force, so the current two-month limits still apply.”
4. What landlords and property managers should do now
Keep using the current limits. Until the new diploma is published and operative, draft leases on the basis of no more than two months of advance rent and a security deposit no greater than two rents.
Separate each payment clearly. The contract and receipt should identify the current rent, each advance-rent month and the refundable security deposit as distinct items.
Do not update standard templates yet. Prepare for the reform, but do not insert a three-month advance-rent clause or an uncapped cash deposit into contracts signed under the present law without specific Portuguese legal advice.
Do not retrospectively increase existing deposits. The Government's own material says agreed deposits cannot be modified unilaterally, and existing contracts retain their terms.
Check the official gazette before signing. Once a final act is published, review its commencement date, transitional provisions, scope and exact wording before changing practice.
5. What tenants should know
A Government announcement does not, by itself, change the amount due under an existing lease.
Ask for a written breakdown showing current rent, advance rent and the deposit separately.
A security deposit is a guarantee, not additional rent. Its return and any deductions should be handled according to the contract and applicable law.
For a new lease, payment terms are negotiated. Do not rely on headlines alone; check the contract wording and the law in force on the signing date.
Frequently asked questions
Can a landlord ask for three advance months today? Not under the rule currently in force. Article 1076 still limits advance rent to two months by written agreement. The proposed three-month maximum has been approved as policy but is not yet operative law.
Can three monthly rent payments still be due at signing? Yes. The official explanation treats the first month as the current rent, not an advance payment. A tenant may therefore pay the current month plus two future months at signing under the present rule.
Can a cash deposit exceed two rents today? The current Article 1076 ceiling is two rents. The Government intends to replace that fixed limit with a contractually agreed amount, but the final legislation must be published and take effect first.
Can a landlord increase an existing deposit after the reform? The announced approach says no unilateral change. Existing contracts keep their agreed terms, and the Government's explanatory material says the deposit set in the contract cannot be modified unilaterally.
Does this matter for commercial leases? The current Article 1076 rule sits within the general urban lease regime and is relevant beyond residential tenancies. Commercial guarantees can also take forms such as bank guarantees. Because classification and contract structure matter, commercial arrangements should be reviewed individually.
The bottom line
The circulating claim is partly true but mistimed. Portugal's Government has approved a reform that is intended to permit up to three months of advance rent and contractually negotiated deposits for future leases. But as of 17 July 2026, those changes are not yet in force.
Until a final diploma is published and reaches its commencement date, the safe working position is still: no more than two months of advance rent by written agreement, and security up to the equivalent of two rents.
“Real reform, not live law: use Portugal’s current 2+2 limits until the final rental diploma is published and enters into force.”
Renting or letting in the Algarve and not sure where you stand? Drop us a message and we'll help you make sense of it.
Official sources
Diário da República: advance rent explained (antecipação de rendas)
Diário da República: security deposit explained (caução da renda)
Government of Portugal: rental reform announcement, 9 July 2026
Diário da República homepage (publication status checked 17 July 2026)
Legal note: This article provides general information and is not legal advice. The final wording, scope, transitional rules and commencement date may differ from the Government's explanatory material. Check the Diário da República and obtain Portuguese legal advice before changing contract terms.
