government pledges to reform rental laws in portugal
News Posted On: 16 March 2011
The Portuguese government has just announced that it will introduce measures which will streamline rules on rental properties. Archaic rules and regulations have put off foreign investors, stifling the market, and this is an attempt to jumpstart an economy that's had one of the weakest growth rates in Europe over the last decade.
Legislation was introduced in 1981 which lifted rent controls on new contracts, and a law introduced in 1990 allowed landlords to set expiry dates on leases. However more than half of the rentals in Portugal are subject to older restrictions, with some dating back to the 1960s. This means that some properties are being rented for as little as five euros a month for a four-bedroom apartment in the capital.
Amazingly enough, even the death of a tenant isn't always adequate grounds to break a lease, as the contract can be passed on to children or spouses. A law introduced in 2006 gave landlords greater powers to negotiate rents, but they only have the abilities to this if the municipal authorities certifying that the buildings are in good shape. Unfortunately this isn't the case with many properties which are crumbling due to lack of investment as the rental income has failed to keep pace with the cost of maintenance. It's estimated that Portuguese housing needs about €74 billion of renovation work.
The new laws are aimed at simplifying evicting nuisance tenants and at simplifying the licensing process for renovation work. They should also simplify the process for certifying that buildings are adequately maintained, justifying a rent rise.
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