The Affordable Rental Programme has been launched to enhance the supply of long-term residential housing at controlled prices. The initiative targets accommodations for individuals and middle-income families who now have difficulty in finding affordable flats, taking into account the inflated prices currently being practised in the marketplace. The premise is to create a win-win situation for all parties. Tenants should be able to find suitable housing at lower prices. Landlords can advantage of the new tax breaks that have been created for the new rental income they receive.

Who can participate?

The Affordable Rental Programme (“PAA”) applies only to new contracts and renewals. For tenants, there are income ceilings when joining the programme. For lessees who are single to be eligible, annual income must be under €35,000. If the household is comprised of two people, the joint income may not exceed €45,000. Each additional household member raises the maximum earnings ceiling raises by €5,000.

Students may also apply, even if they do not have any income of their own. Landlords may place properties in the “PAA”, provided that the rented property respects certain prescribed conditions.

How does it work?

An online platform is available on the housing portal (www.portaldahabitacao.pt) where the owners can simulate the conditions for the lease, namely the maximum amount of rent that is allowed to be charged. If they wish to join, they complete a form in which they will have to enter essential data such as the area of the property, type of accommodation and location as well as download the habitation permit and the energy efficiency certificate of the property.

The platform then issues a registration certificate to be attached to a future contract so the landlord can access the tax benefits. Those who want to rent a home can also simulate the conditions under which they can join the programme, including the maximum and the minimum income they can afford under this initiative. If they meet the required conditions, they can join the platform by identifying the number of people in the household, their incomes and the type of accommodation. With this data, an application certificate will be issued, which will be attached to a future contract.

The landlord and tenant are free to agree a contract within the required parameters. For example, while rent cannot exceed a certain amount, nothing prevents a lower price being negotiated (within the minimum limits). Once the contract is signed, this document must also be downloaded from the platform.

Lease agreements made under the PAA must have a minimum duration of five years. There is one exception: in the case of displaced students, the minimum period is nine months.

How much will each household pay in rent?

The rent will have a minimum and a maximum limit. The value of the lease cannot be less than 15% and not more than 35% of the average monthly gross income of the household.

How much will the owners’ charge?

This depends on the property in question, but there are maximum amounts for rentals that owners can charge. These limits are set by the government and vary according to the location of the housing. There are six different levels, as follows:

Monthly rental limits: by type in Euros, per level

Levels     T0       T1      T2         T3         T4          T5

Level 1 €200   €275   €350     €425      €475       €525

Level 2 €250   €350   €450     €525      €600       €675

Level 3 €325   €475   €600     €700       €800      €875

Level 4 €400   €600   €775     €925     €1025    €1125

Level 5 €525   €775   €1000   €1200   €1350    €1500

Level 6 €600   €900   €1150   €1375   €1550    €1700

Can a tenant sublet?

No. The rule is one person per room. For example, a couple with a child can rent, at most, a T3.

Can the landlord demand a guarantee?

Generally speaking, no. However, there are exceptions. This is the case for students without their own income. In this case, the person paying the rent will assume the role of guarantor.

Insurances

In order to join the platform, there are three types of insurance that are mandatory. The first is to cover any failure to pay rent. The second is to safeguard against the loss of income to the tenant’s income. And a third covers any damages to the property. The first is for the landlord. The latter two are for the tenants. Until these insurances are in place in the marketplace, a guarantee may be necessary.