Annual Rent Updates in Portugal: How the INE Coefficient Works

Every year in Portugal, landlords have the legal right to update the rent on their residential leases — but not by any amount they choose. The update is tied to an official inflation coefficient published by INE (Instituto Nacional de Estatística, the Portuguese statistics agency). In 2023 a one-off legal cap limited that update to 2%, and Lei 56/2023 separately caps the initial rent of new contracts on recently-rented properties — two different rules this guide untangles below.

If you're a landlord wondering whether you can raise the rent, or a tenant who just received a rent increase notice, this guide explains exactly how the system works and what the law requires.

The Legal Basis: Article 1077 of the Civil Code#

Article 1077 of the Portuguese Civil Code establishes that rent for urban leases can be updated annually, according to a coefficient published by INE. This is the coeficiente de atualização de rendas — the official rent update coefficient.

Key principles:

• Annual updates only: Rent can only be increased once per year
• Coefficient-based: The increase cannot exceed the official INE coefficient
• Written notice: The landlord must notify the tenant in writing before the update takes effect
• A clause is good practice, not a condition: The update right applies by default (Art. 1077.º, n.º 2 CC) — an express clause makes it explicit but is not required

How the INE Coefficient is Calculated#

INE publishes the annual rent update coefficient every year, typically in October, for application in the following year. The coefficient is based on the Consumer Price Index excluding housing (IPC sem habitação) — specifically, the 12-month average variation available at the end of August of the preceding year (Art. 24.º NRAU).

The Formula#

The coefficient is calculated as:

Coefficient = 1 + (CPI average inflation rate)

For example, if the average inflation rate is 2.16%, the coefficient would be 1.0216, meaning rents can increase by up to 2.16%.

Where to Find the Coefficient#

The official coefficient is published in the Diário da República (Portuguese Official Gazette) and is available on the INE website at ine.pt(opens in new tab).

Year of Application	INE Coefficient	Max Increase
2023	1.02	2% — legal cap (Lei 19/2022), not the CPI value
2024	1.0694	6.94%
2025	1.0216	2.16%
2026	1.0224 (Aviso n.º 23174/2025/2)	2.24%

Want the exact maximum for your rent? Use our free Rent Update Calculator — it applies the official coefficient for each year and the legal rounding rule (Art. 25.º NRAU, rounded up to the next cent).

The Mais Habitação 2% Cap — New Contracts Only (Lei 56/2023)#

A common point of confusion: Lei 56/2023 (Mais Habitação) did introduce a 2% cap — but it limits the initial rent of a NEW contract, not the annual update of an ongoing one. Annual updates of existing contracts follow the INE coefficient described above.

What the Cap Actually Says#

For new residential contracts on a property that was rented at any point in the previous 5 years, the initial rent cannot exceed the last rent charged on that property plus 2% (coefficient 1.02). Two additions are allowed on top:

• Annual update coefficients from the previous 3 years, if the old contract never applied them
• Duly certified costs of major renovation works, within legal limits

Which Rule Applies to Your Situation?#

Situation	Applicable Limit
Ongoing contract, annual update	✅ INE coefficient (1.0224 in 2026)
New contract, property rented within the last 5 years	✅ Last rent + 2% (initial rent cap)
New contract, property first time on the market	❌ No cap — initial rent freely set
Property vacant for 5+ years before re-renting	❌ No cap — initial rent freely set
Commercial lease	❌ No — residential cap only

How to Apply a Rent Update#

Step 1: Check the Current Coefficient#

Confirm the applicable INE coefficient for the current year. This is published in the Diário da República and on the INE website.

Step 2: Confirm the Update Conditions#

At least one year must have passed since the contract started (or since the last update), and the update can only be applied once per year.

Step 3: Calculate the New Rent#

Multiply the current rent by the year's coefficient, rounding up to the next cent (Art. 25.º NRAU):

Example (2026):

• Current rent: €800/month
• INE coefficient: 1.0224 (2.24% increase)
• New rent: €800 × 1.0224 = €817.92/month

Our free Rent Update Calculator does this for any rent and any year — including the rounding rule.

Step 4: Notify the Tenant#

Send written notice to the tenant at least 30 days before the update takes effect. The notice must include:

• The current rent amount
• The new rent amount
• The applicable coefficient or cap
• The effective date

Common Mistakes to Avoid#

For Landlords#

• Exceeding the coefficient: An annual update cannot exceed the INE coefficient; the 2% rule only limits the initial rent of a new contract on a recently-rented property
• Skipping written notice: Verbal notice is insufficient — put it in writing
• Wrong timing: You must wait until the contract anniversary to apply the increase
• Multiple increases per year: Only one annual increase is permitted

For Tenants#

• Ignoring the notice: If you receive a valid rent increase notice, the new rent applies from the specified date
• Assuming no increase allowed: Even during high inflation, landlords are legally entitled to the annual update
• Not checking the math: Verify that the increase matches the published INE coefficient — our Rent Update Calculator shows the exact legal maximum

Rent Updates and Your Deposit#

When rent increases through the annual coefficient, the security deposit (caução) should technically be adjusted to maintain its two-month equivalent. However, this adjustment requires mutual agreement — the landlord cannot unilaterally demand additional deposit funds.

Frequently Asked Questions#

Include the Right Clause in Your Lease#

A well-drafted lease should include a specific annual rent update clause citing Article 1077 of the Civil Code and the INE coefficient. This protects both landlords (by preserving the right to increase) and tenants (by limiting increases to the legal maximum).

CompliantLease automatically includes this clause with the correct legal references in every contract.

For a complete legal breakdown of how rent increases work — including the Mais Habitação 2% cap, re-rental limits, and step-by-step calculation examples — read our guide: Annual Rent Increase Rules in Portugal. You should also understand your rent receipt obligations, as receipts must reflect updated amounts, and how rent updates interact with lease renewal and renegotiation.

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