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COVID-19: Impact on Leases

Ana Baeta - 29 June 2020

With the epidemiological situation that affected Portuguese society, there was a need to create an exceptional regime for leasing.

Law no. 4-C / 2020, of 6 April, (with the amendments to Law no. 17/2020, of 29 May) created the exceptional regime for late payment situations in rent contracts urban housing and non-housing leases, for rentals due from 1 April 2020.

Housing lease

To whom does this exceptional regime applies to:

Tenants

  • whose household suffers a drop of more than 20% in income compared to the previous month or the same period in the previous year;
  • whose household effort rate is 35% or more.

Landlords

  • whose loss of income is caused by non-payment of rents by the lessee.
  • whose household suffers a drop of more than 20% in income compared to the previous month or the same period in the previous year;

Tenants who intend to use this exceptional regime 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 from this regime.

The landlord can only terminate the lease agreement based on the delay in the payment of rent due during the months in which the state of emergency was in force and in the first subsequent month (that is, between March and June 2020), if the tenant does not make the payment, within 12 months, in monthly instalments of not less than a twelfth of the total amount, paid together with each month's rent.

Tenants and landlords (if the former have not done so), provided they demonstrate the drop in income referred to above, can benefit from the granting of an interest-free loan from the Institute of Housing and Urban Rehabilitation, IP (IHRU, IP ), which covers rents due between 1 April and 1 September.

Non-housing lease

To whom does this exceptional regime applies to:

  • Retail trade and service establishments that have been closed due to the state of emergency or the subsequent calamity situation, even though telecommuting;
  • Catering establishments and similar, even though the take-away services remain in operation.

Rent earned during the state of emergency and up to the first month thereafter, can be paid in twelfths along with the rent for the month in question, as of September 1 - as long as everything is settled by June 2021.

Lease contracts cannot be terminated on the grounds of non-payment of rent until 9/1/2020.

In common with housing and non-housing leases:

  • Public entities with rented properties can reduce rents to tenants or establish default until 9/9/2020;
  • The compensation for late payment is not due during the months in which the state of emergency is in force and until the following month (that is, between March and June 2020). The delay in payment of rents due until September 1st can be deferred in twelfths.

 

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