Rental Contracts Will Now Have Minimum Duration of One Year

18 October 2018

Rental agreements will start having a minimum duration of one year and, barring any communication to the contrary, they will automatically renew themselves for another three years. The legislative initiative, proposed by the Socialist party, is part of a series of measures aimed at the rental market that was approved Wednesday in Parliament by a preliminary vote in the Parliamentary Working Group on Housing.

“[The contract] may not be for less than one year nor more than 30 years, to be automatically extended or reduced to said minimum and maximum limits when, respectively, it falls below the first or exceeds the second,” the proposal that was approved stated. The proposal received favourable votes from the PS, PCP and BE and votes against by the PSD and CDS-PP.

The initiative for stipulating the right term of the lease contracts arises in a modification to the Government’s bill that aims to “establish measures to correct situations of imbalance in the position of tenants and landlords, to increase the security and stability of urban lease and protect tenants in a situation of special fragility “.

Non-permanent housing not included in measures

In the proposal, the Socialists indicated that the minimum term of one year “will not apply to contracts for non-permanent housing or special transitory purposes, namely for professional, education, training or tourism.”

The BE (Left Block) had supported a minimum contract of five years, with a maximum of 30 years but their proposal was rejected by the PS, PSD and CDS-PP, with fewer votes in favour by the PCP and BE.

Regarding the automatic renewal of rental agreements, the parliamentarians approved the Socialists’ proposal which states that “unless otherwise stipulated, fixed-term contracts shall be automatically renewed upon their expiry for successive periods of equal duration, or, three years in cases where the term is inferior.”

Regarding the cancellation of contracts by property owners, the deputies approved a proposal by the Government so that contracts must be cancelled “through at notice to the tenant at least five years in advance of the date of the proposed cessation.” The current minimum is two years.

If the property owner is cancelling the contract to revert the property to their own use or that of their immediate family, the deputies approved an initiative by the PCP stating that “the tenant is exempt from payment of tax on any compensation.”

The Parliamentary Working Group on Housing also approved an initiative by the BE stipulating that the cancellation of rental agreements “must be confirmed, under penalty of voiding the cancellation, through written communication with a maximum notice of 15 months and a minimum of one year for the date of its execution.”

Regarding leases for non-residential purposes, the MEPs approved a proposal by the PS that, “unless otherwise stipulated, fixed-term contracts shall be automatically renewed at the end of the contract and for successive periods of equal duration or five years if inferior.”

Vote on non-discrimination in access to rental market

The socialist proposal introduced a new article to the Civil Code on “non-discrimination in access to the rental market,” with the PS, PCP and BE voting in favour and the PSD and CDS-PP abstaining. The process began in the parliamentary working group on Housing, Urban Rehabilitation and City Policies, after two requests for postponement by the parliamentary groups of the PS and the PSD.

MEPs expect to conclude the vote next Tuesday, with the ratification of the process in the parliamentary committee on Environment, Spatial Planning, Decentralization, Local Power and Housing, so that the proposals can then be included in the plenary session on October 26 for a final vote, before the approval of the State Budget for 2019 (OE2019).

Original Story: Idealista

Photo: Andrea Natali / Unsplash

Translation: Richard Turner