The new changes in the urban lease law were created with the aim of correcting situations of imbalance between tenants and landlords. In addition, the new measures are intended to strengthen the security and stability of urban leases and protect the most fragile tenants, such as the elderly and people with disabilities.
What are the main changes in the urban lease law for tenants?
Protection for tenants who do not have a written lease:
- With the new changes, tenants who do not have a written contract will be included in the lease for an indefinite period. However, the indefinite lease will only be valid if the tenant proves that he pays rent and has occupied the property for at least six months.
New minimum deadlines with changes to the urban lease law
Since the new NRAU amendments entered in Diário da República, the lease contracts have a minimum term of one year, and have a mandatory renewal term of three years. However, renewal of the contract can be established in other terms, provided that the two parties reach an agreement on another term.
Special protection for fragile tenants:
Tenants aged 65 and over and tenants with a disability equal to or greater than 60% who have lease agreements prior to 1990 are given special protection. Tenants who have been living in rented housing for more than 15 years cannot see their lease agreement come to an end unless that housing is demolished or undergoes major renovations.
Tenants can prove the length of stay in the rented housing with a certificate from the parish council of their residence.
This protection is linked to the lack of information or response to the rent update letters after the NRAU comes into force. Many tenants are at risk of being evicted, as their lease contracts now have a term of five years.
Weak tenants, with the characteristics mentioned above, who have lease agreements signed between 1990 and 1999 cannot be evicted if they have lived in that property for more than 20 years. The lease can only come to an end in case of demolition or deep works.
What are the main changes in the urban lease law for landlords?
Creating tax incentives for landlords that promote long-term leasing
This measure aims to encourage long-term leases by reducing the IRS rate, which currently stands at 28%. Landlords now see the IRS rate reduced in the following terms:
2 to 5 year contracts: reduction of 2%, with the IRS rate at 26%. Whenever there is a renewal, the rate reduces an additional 2%, with a maximum limit of 14% reduction.
From 5 to 10 years: The signing of a contract of this duration immediately reduces the IRS rate to 23%, and there is also a progressive reduction with each renewal, up to a 14% reduction.
Between 10 and 20 years: Landlords benefit from a 50% reduction, with the IRS rate at 14%.
Contracts over 20 years: Landlords who enter into these contracts will have an 18% reduction, and will have an IRS rate of 10%.
End of lease
Landlords will have the right to terminate a lease, after formal notice with registered letter and acknowledgment of receipt, if they invoke the need for their own housing in that dwelling.
However, in the remaining cases where the renewal of the contract is not involved, the landlord may terminate the lease for reasons of works, but only when they involve the demolition / disappearance of the house.
In the case of other works, the contract is suspended for the duration of the necessary intervention. In these cases, the landlord is responsible for ensuring that the tenant resides in an equivalent home.
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