Portugal has introduced a new law on the right to housing and has introduced a new type of lease: the life contract. Indeed this new law of the right to sustainable housing makes it possible to conclude contracts of housing for life between owners and tenants. In practice, the real right to sustainable housing functions as a tenancy agreement that lasts until the tenant dies. But this implies compliance with other obligations that the "conventional" lease does not provide. This new type of lease for life allows for some stability but also entails new obligations on the part of the tenant and the owner. What are the terms of the lease for life? How does the lease with life lease in Portugal work? Lisbob, the expatriate assistant in Portugal, tells you all about the lease for life.

Caution

One of the main obligations of the tenant in Portugal is the payment of a deposit to the owner. When signing the lease for life, the tenant will pay the owner a deposit of 10 to 20% of the value of the property, to be defined between the parties. This is the amount of the deposit or deposit. If the good is for example 100,000 euros, a deposit between 10 and 20 000 euros must be paid by the tenant. No information has yet been provided as to whether the amount of the deposit is calculated on the commercial value of the property or the tax value of the property (the VPT of the property, included in the property register) calculated by the Portuguese authorities.

Rent

Every month, the tenant also pays rent to the landlord, as in a "classic" rental agreement in Portugal. The rent will have to be updated every year, according to the house price index calculated by the Portuguese National Institute of Statistics (INE). This will result in a reasonable increase in rents for tenants with lease agreements for life.

Departure of the tenant

If the tenant decides to leave within the first 10 years, the landlord must return the entire security deposit to the tenant, less any damage. After the initial period of ten years, the departure of the tenant results in the return of only part of the deposit paid. Indeed, for each year that follows the 10 years, the owner can retain 5% of the deposit paid.

The calculation is simple: from 30 years of lease, the tenant will not recover anything from his deposit, even if he withdraws from the contract.

Can the owner sell the property?

Yes, the owner of the property continues to be able to exercise his right to sell it, like any other owner in Portugal. However, the real right to sustainable housing does not go away with the property transaction. Indeed the tenant has the right to stay in the housing and continue to benefit from the same lease with lease for life. This circumstance will generally be an obstacle to the sale of the property once the buyer has understood that the use of his property is conditioned.

What happens when the owner dies?

The real right to sustainable housing in Portugal is not extinguished with the death of the owner. Therefore, it is transferable, by inheritance, to the heirs of the owner. In practice, this means that even after the death of the owner and even after the property has been handed over to the heirs, the tenant can stay in the house and continue to benefit from the same lease agreement with a lease for life. On the other hand, the death of the tenant implies the termination of the contract.

Advantages of the lease with life lease for the owner

From the point of view of the owner, the deposit is the main advantage of this new type of lease for life in Portugal. On the one hand, it is not necessary for the owner to sell his assets to benefit from a capital increase; and secondly because the payment of the deposit reduces the risk of non-payment by the tenant.

Lifetime lease benefits for the tenant

For the tenant, the main advantage is to be able to live in a dwelling forever, while retaining the freedom to terminate the lease. If the tenant terminates the contract before the 30th anniversary of the contract, he may receive some or all of the deposit paid at the beginning of the contract. It can also mortgage its real right to sustainable housing if there is a need for financing to pay the initial guarantee.

Article translated from website Postal.pt

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