Parliament approves legislation providing for moratorium on payment of rent

in News · 03-04-2020 10:48:00 · 0 Comments

The proposed law that allows tenants in difficulties to suspend the payment of rent during the state of emergency and the following month was approved in parliament on 2 April with the favourable vote of the PS and abstention from the remaining benches.

Law proposal No. 21 / XIV - "which establishes an exceptional regime for situations of delay in the payment of rent due under terms of urban housing and non-housing leases, within the scope of the covid-19 pandemic" - creates a exceptional tenant protection regime, providing specific rules for non-housing rents and also safeguarding the situation of landlords who may be in a situation of economic need due to the lack of payment of their tenants' rents.

During the debate in the Assembly of the Republic (AR), the Minister of Infrastructure and Housing, Pedro Nuno Santos, pointed to housing as “one of the areas where one feels the most instability, insecurity and anguish” in the context of the current crisis, having been an objective of the Government "to find a balance that protects tenants, defends the rights of landlords and also preserves the budgetary capacity of the State to continue other housing programmes".

The proposal presented by the executive underwent only two changes following two amendments proposed by the PS and the Left Block (BE).

On the proposal of the socialists, article 5 of the proposed law was amended, so that students displaced from home can also benefit from interest-free loans from the Housing and Urban Rehabilitation Institute (IHRU) when they are unable to pay their rent.

The other amendment proposed by the PS specifies that compensation for late payment of rents is not due "in the payment of rents that are due in the months in which the state of emergency is in force and in the first subsequent month" (in the initial wording the waiver of compensation referred to rents that were due between 1 April and 1 July, 2020).

The change introduced by BE refers to the landlord's notification deadlines regarding the request for a moratorium, providing that, in the case of rents that are due upon the entry into force of the decree-law, this notification can be made “up to 20 days” (against those previously provided for 10 days) after the entry into force of the law.

The new rules now approved in parliament provide, in the case of households, that there may be a suspension of the payment of rent in the months in which the state of emergency is in force and in the subsequent month if there is a drop of more than 20 percent of household income relative to the income of the previous month or the same period of the previous year.

This same suspension is allowed if the tenant's household effort rate for the payment of rent becomes greater than 35 percent, which may be due to the drop in income imposed by the economic impact caused by the covid-19 outbreak.

In these situations, the diploma determines, the landlord is only entitled to terminate the lease, for failure to pay rents past due in the months in which the state of emergency is in force and in the first subsequent month, “if the tenant does not make his payment, within 12 months from the end of that period, in monthly instalments of not less than one-twelfth of the total amount, paid together with the rent for each month”.

Tenants who are unable to pay rent “have a duty to inform the landlord, in writing, up to five days before the expiration of the first rent in which they intend to benefit”, with respect to rents due in the meantime the notification can be made up to 20 days after the date of entry into force of this law.

Housing lessees, as well as students who do not earn income from work and guarantors, who have a drop in income and are unable to pay rent, can apply for a loan, without interest, from the Institute of Housing and Urban Rehabilitation (IHRU) to support “the difference between the amount of monthly income due and the amount resulting from the application of a maximum effort rate of 35 percent to household income”, without resulting in a household income lower than the social support index (IAS - 438,81 Euros).

This possibility does not cover tenants “whose income drop determines the reduction of the rent they owe, under the terms established in special rental or income regimes, such as supported rent and social rent”.

The law provides that public entities with rented properties may, during the period in which this law is in force, reduce rents to tenants.

Landlords who have proven to have a drop in income (20 percent compared to the previous month or similar period) and whose tenants do not use a loan from the IHRU, can apply to this institute for a loan, without interest, to offset the monthly amount of the rent “whenever the remaining disposable income of the household falls, for such reason, below the IAS”.

Regarding non-housing rents, the diploma allows the deferral of the payment of rents "overdue in the months in which the state of emergency prevails and in the first subsequent month", for the 12 months after the end of that period "in monthly instalments of not less than one twelfth of the total amount a month, paid together with the rent for the month in question”.

The measure includes establishments open to the public for retail and service provision activities that are closed or that have their respective activities suspended or restaurants and the like, including those that maintain activity selling ready-to-eat food or on a 'take away' basis.


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