If you are a renter or landlord of a house, be aware that the value of rents will change in the market in 2023!

Thus, the value of rents will increase during 2023, but the update coefficient will be fixed, in an attempt by the government to help both sides.

In fact, recently, rental prices in Portugal have been high, especially in the main urban centers, such as Lisbon. Some reported scenarios are discouraging and worrying.

However, given these scenarios, an important measure was validated to try to contain the large increase in prices. So, let's find out more about these new developments in the house rental market.

With market price scenarios similar to cities like Paris and New York, but with much lower financial reality, house rent prices in large Portuguese cities are sky-high.

Although, for many years, landlords were pressured by the rent freezing law, this scenario appears to have been reversed and there was great pressure on tenants.

However, an important change in the house rent market for the year 2023 was established by the Portuguese government. Therefore, during this year, there will be a kind of brake on the price at which rents can reach.

Therefore, the income update coefficients will not be updated. But, do you know what this important term for leasing means?

So, if you've never heard about the rent update coefficient, this is the ideal time to find out more. Thus, this is a percentage directly related to the annual increase in the value of rents.

Furthermore, the value of the coefficient is regulated through the CPI, consumer price index and inflation. Therefore, based on this value, the landlord can update the rent values at the beginning of each year.

However, in 2023 the update coefficient will not follow inflation to guide the market value of house rents. Therefore, the government decided to establish a fixed increase of up to 2%! That is, the coefficient is 1.02.

The objective is to try to mitigate the expenses of the population that still suffers the effects of inflation and the war in Ukraine. In other words, a brake was placed on the increase in rents. If this did not occur, the coefficient would be more than 5%.

Well, for the tenant and the landlord it is important to understand how this coefficient is applied in practice. This is because not everyone understands how the dynamics work. But rest assured, the calculation is simple.

Therefore, to know the rental value for 2023, simply multiply the update coefficient (1.02) by the current rental value. The result of this account is the rental value ceiling for that year.

In other words, if you currently pay 1,000 euros, with the coefficient of 1.02, you will pay 1,020 euros. A concrete increase of 20 euros per month.

Furthermore, if there was no brake, in the example mentioned, you would pay more than 50 euros per month more. But, if you are a landlord, don't be worried about your income. There are compensations designed by the government to benefit you!

Furthermore, it is important to highlight that you can only legally increase the value of your home's rent after 1 year of the contract. In other words, you must wait for the correct date to update the value.

In fact, you must notify your tenant at least 30 days before the value comes into force. So, don't forget this important and legally mandatory step. Thus, the tenant can contest and analyze the amounts charged.

But, in addition, every owner can request compensation under the law that restricts leasing through tax. This way, you will be able to exclude part of the income from your tax return. In other words, it will reduce your IRS spending!

You can calculate the value of the rebate based on the support coefficient and the applicable special rate. This way, you can do the math and find out how much you will save in this situation.

For example, in the case of an IRS applicable rate of 28%, it would generate a support coefficient of 0.91. In other words, 9% of the income is not taxed.

Furthermore, any tenant who is experiencing difficulties paying their 2023 rent can request government assistance.

Therefore, anyone between 18 and 35 years old can apply for the Porta 65 Jovem program, which offers income sharing. So, if you are experiencing this type of difficulty, search the internet for more about this program.

Therefore, the house rental market is not so good in 2023, but with the move the expectation is that the situation will remain under control.

On the other hand, if you are dissatisfied, you can look for other housing options, such as housing loans for your own home.

So, if you are up to 35 years old, you may be interested in finding out how the Novobanco program exclusively for young people works. Credit offers exclusive options with discounts and benefits to own your own home!

So, if you want to know more about how Novobanco works and how it can benefit you, read our exclusive article on the subject. So, click on the link below and see all the details.