Room Rentals in Portugal: A Viable Option for Extra Income and Investment

By Flavia L. Lamattina

The Portuguese real estate market has a vibrant segment that is often neglected elsewhere: room rentals, which can serve as extra income for families but also as an alternative business model for investors in the Silver Coast region. Initially thought to cater to students or newcomers to the country, this type of rental has attracted people with various backgrounds and needs.
An interesting group of tenants consists of people aged 30 to 40, including professionals like teachers and nurses who have to move frequently. Despite having steady employment, many find it difficult to cope with high rental prices and the scarcity of housing. Couples saving to buy their first home and visitors planning extended stays of up to six months may also seek rooms for rent.
According to the real estate website Idealista, the demand for rooms has increased by 71% in recent months, even with rising prices. The supply has also grown significantly: in Lisbon by 147%, in Porto by 107%, and in Leiria by 96%. None of the 15 main Portuguese cities showed a decrease in supply, and prices increased by an average of 35% over the past year. The rental price for rooms in Leiria rose by 17%, averaging 300 euros per month. In Lisbon, the cost can reach 500 euros, and in Porto, 400 euros. In the Caldas da Rainha region, the average price varies between 16 and 20 euros per square meter, depending on the property’s condition.
As for legal and contractual considerations, it is crucial for both tenants and landlords to understand that room rentals follow the same rules as house and apartment rentals. The Portuguese law provides for 3 leasing options, which are: renting the entire property to a single person or a family; renting the entire property to a group of people (for example, a group of friends) in a single contract; renting parts of the property to different individuals with separate contracts. The contract to be used in a room rental is the “Arrendamento de Quarto para Habitação em Prazo Certo”, or Fixed-Term Room Rental for Housing, which can be easily found online and should specify aspects such as: description of the rented space and clear definition of shared spaces like the kitchen, bathroom, laundry room, garden, or terrace; duration of the lease (renewal conditions and minimum stay periods), rent amount and payment terms. Also the landlord should attach the Energy Certificate, property usage license, and prohibition clauses such as subletting, hosting guests, pets, and non-residential uses. It is also essential to establish house rules before signing the contract, such as quiet hours, use of common areas, permission for visitors, cleaning, and sharing of utility expenses (water, electricity, internet, gas). The contract should also indicate whether the room is furnished or not. In case of students, the landlord can require a guarantor, to be responsible for debts or obligations of an unemployed individual.
Besides the rental contract, there is another important document that should be consulted: Novo Regime de Arrendamento Urbano (NRAU), or New Urban Lease Regime, which clarifies rules regarding repairs, contract renewals, evictions, and the tax-deductibility of rental expenses for primary residences. Even if the contract is signed for a few months, there is an automatic renewal for another year unless specified otherwise. The landlord can request a security deposit and compensation of 20% for late payments, in addition to repairs for damages caused to the property. To avoid disputes, it is recommended that the contract include an inventory of the property’s condition with photographic attachments. Also, the landlord must calculate the monthly expenses for utilities, since those are typically billed between 30 to 60 days after the consumption period. They must also advise the tenant about the impact on the security deposit in case the tenant moves out before the bills come.
As a good reminder for tenants, the room rental contract is tax-deductible. The contract must specify how to pay the rent and how the receipts will be issued. The contract also must specify the landlord’s obligations to maintain the property in its rented condition, along with communication and dispute-resolution terms. The contract must be signed and registered, which involves paying the Imposto de Selo (stamp duty), possible online through the Portal das Finanças (Tax Authority Portal).
Before deciding to rent a room, it is essential to understand all the legal and financial details involved. Proper preparation prevents issues of non-compliance, fines, and disagreements between tenants and landlords. The savvy investor will think about location and ponder initial investments such as furniture and kitchen appliances. Pleasing aesthetics, irreproachable cleanliness and a good atmosphere will attract good tenants. ■