Martes, 20 Abril 2021

Renting a room in Portugal

VolverIn the last decades there has been an increase in the disparity between household income and housing-related costs. These worldwide phenomena, which has been being particularly noticeable in Portugal during the last six years, has caused that people with low incomes or who are in a temporary situation - such as students, employees who went temporarily overseas, etc. – to consider sharing the rental of an apartment as a suitable alternative. Furthermore, by having more than one tenant, landlords have the opportunity to make the most of properties with four bedrooms or more, which, at times, can prove to be difficult to monetize.

In this article we will describe some of the precautions that both landlords and tenants should take when entering into long-term lease agreements of properties with more than one tenant.

1 – (Legally) Renting a room is just like renting a house or an apartment

Although renting a room is usually a cheaper option when compared to renting an entire house or apartment, this type of agreement is still a lease agreement and, as such, all the legal rules and requirements applicable to this type of contracts will also apply.

Therefore, all the precautions usually taken when entering into a lease agreement must be observed - such as the contract duration, the conditions for renewals and minimum periods of stay and how the payment of rent will be made. Also, all the other formalities and necessary documentation will be the same: the lease agreement must be written down, mention the energy certificate and the license off use, etc...

2 - Who are the tenants?

The three most common ways to partially lease a property are:

• a single lease agreement with several tenants (for example, two friends who jointly commit to the obligations of being a tenant) in which case the lease will include the entire house or flat; or

• several lease agreements, one for each room of the apartment / house that is rented (for example, three lease agreements for three different tenants, in which three rooms are rented and all the tenants may use the common areas).

Both alternatives have advantages and disadvantages. In case the second option is chosen - a lease agreement for each of the tenants - special attention should be paid to the following point 3 in this article.

3 - Rent only a room

When the landlord chooses to have a lease for each of the tenants, the agreement must clearly state that the tenant is only interested in renting a certain room – which must be clearly identified in the agreement - and that the landlord is interested in leasing only that one room, stating that there are or may be in the future other lease agreements in place on the same property, and all decisions regarding those agreements are of exclusive responsibility of the landlord.

It is also advisable to state that during the lease the tenant may use the areas of the property that are not exclusively occupied by other tenants.

4 - Common expenses

Given the fact that it is common to have several simultaneous leases on the same property that also include the use of common areas and due to the fact, that is impossible to know the exact consumption of each tenant, how the common expenses will be paid should be stated on the lease agreement. For example, it can be agreed that all the tenants are responsible for the expenses related to the use of the property, namely the utilities bills, such as, for example, the consumption of electricity, water, gas, cable TV or telecommunications.

Because tenants tend to change frequently in these situations, it is normal for utilities contracts to remain in the name of the landlord for the duration of the contract, but the lessee can still make the monthly payment of the respective invoice directly to the supplier or, alternatively, transfer the amount to the landlord. It may also be prudent for the landlord to demand a security deposit for this type of payment.

5 - Tax obligations

Finally, the landlord must inform the Tax Authority about each lease agreement and must issue the correspondent receipts. The autonomous tax rate of this type of agreement is typically 28%. However, there may be a reduction in the IRS of two per cent for the lease agreements in which the duration is equal or greater than 2 years and less than 5 years; five per cent in contracts between 5 and 10 years; and fourteen percent for contracts between 10 and 20 years.

Departamento de Derecho Inmobiliario | Portugal

 

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