For nearly 50 years until 1986, the legislation in place didn’t allow lease raises in Lisbon and Porto. Knowing leases would remain unchanged, landlords demanded high premiums for first contracts. Portugal thus had the highest initial lease values per square meter in Europe, even tough the average income of its population was among the lowest in the European Union.
456 % rises
After 1986, when lease freezing was over, leases were updated by, firstly, a special correction factor and afterwards an annual increase raise dependent on the inflation rate. The result was that a lease on an apartment dating from 1970 accrued by 456% in the last 18 years, an amount considerably above the inflation in the same period. Notwithstanding, old leases are still significantly lower than new leases, particularly on those apartments which were never renovated (the majority) since renovations usually imply a substantial lease raise.