Renting in Portugal 2019 - Part Four

​Now that you’ve found your perfect new home, the next step is going to contract. This can be a challenging experience, but it is doable. Let’s dig into the process.

​​Contract Negotiations
Much like in the U.S. when you’re buying a house or apartment, once you’ve decided on a property, you submit an official offer and the negotiations begin. With our first Portuguese apartment rental we had an agent on our side of the negotiation while the landlord did not have an agent representing him. For our second apartment there were agents on both sides of the transaction. 

​If you’re working through a real estate agency let your realtor handle the back and forth. In the case of our second apartment, we submitted an offer on a T2 (two bedroom), lowering the price per month to an amount suggested by our realtor and offering four months’ deposit in advance (one month security, three months’ rent). At this point we did not know the identity of the landlord, but we did ask some questions. We did not want to deal with an out-of-town landlord or an agency, or multiple owners. Others might not care, but it was a red line for us as we did not want a battle on our hands in the event there were some issues with the property. During the back-and-forth, a counteroffer from the landlord bumped our suggested price up 50 euros per month, and she requested four months’ rent in advance plus the security deposit.

Many ads will specify you will need a fiador, which is another Portuguese citizen who will guarantee to pay the rent in the event that you fall behind. Since we didn’t have someone who would serve as our fiador, it was necessary for us to pay more rent in advance to provide assurance that we would be able to make future payments. The rent in advance amount can get outrageous and four months was all we were willing to do. We have seen some landlords ask for six months and even one year in advance, which, for us, would be the time to walk away. Though we hated to tie up that much money up front, we loved this new place so we accepted the offer and went to contract. 

Your contract should specify exactly when the rent is due; if you, as the renter, are responsible for maintenance of the appliances within the apartment (yes, that happens here); and how much lead time you or the landlord require to end the lease. Also, how that notice of departure must be submitted, for example by registered mail. 

Our latest contract was twenty pages long. Yeah, twenty pages. The parts we didn’t quite understand we ran through Google Translate (fine for going from Portuguese to English) and the rest we asked our realtor to clarify.

One cool thing: By Portuguese law you are required to only fulfill one-third of the length of the lease. In our case, our new apartment lease was for three years so we only have to stay twelve months should we decide to move on. Our first lease was for two years, and we found that we really wanted to have a longer lease time where we didn’t need to stress about how the renewal was going to work. Since we were only actually committed to staying for one year due to the 1/3 rule, a three year contract is a good length of time to shoot for unless you are uncertain about where you want to live.

The contract should specify the terms for lease extension. Generally, your lease will automatically extend if neither you nor the landlord provides notice. That extension most likely will be twelve months regardless of your original lease’s length. 
Portuguese law tends to protect the renter, especially if you’re over 65. To get the full idea of what all that involves, we recommend talking to either a realtor or a real estate attorney.

Rental Increases
During the period of your current contract, landlords are only able to increase the rent by an amount specified by the Portuguese government. For our previous apartment this amount was 1.0115% of the rental amount for the year 2019. This is, in essence, a cost of living adjustment. Because of this, a landlord may want to have the current tenant move on so they can rent the apartment for a higher amount, especially in a hot rental market. Your landlord may report that they have a relative that needs the apartment, or that they intend to sell, both conditions that they can use to not renew the lease. The rental law is on your side if you want to stay where you are, but it’s a matter if you want to fight this battle or just use it as an excuse to move on and find another place that you like even better.

Next Steps
Nothing moves at lightning speed here: We met with our realtor to make the offer on a Wednesday afternoon and finally heard back about the landlord’s counteroffer on the following Tuesday. We didn’t sign the contract until the next Monday, almost two weeks’ time. In between all this there were the various negotiations plus the agency’s lawyer eyeballing the contract to ensure it was kosher. The process actually moved rather quickly by Portuguese standards. Honestly, all you can do is take a deep breath and hope for the best. 

When we went to contract on our new place, the final tally was:
One month’s rent as security deposit
Four months’ rent in advance (this included the first month’s rent)

To pay the deposit we transferred funds from our bank account to the landlord’s at the time of signing (our bank is located in Portugal). Be aware that if you’re transferring a large amount of money, some banks have maximum amounts they’ll allow per day. Establish what that limit is beforehand and chat with your bank if that number needs to be raised to avoid embarrassment. 
We thought we had that all figured out with our bank, but the transfer was denied for who knows what reason. Ugh. Fortunately, Harold had already lined up a second source of funds from another bank and that transfer went through without a hitch. Whew!

Moving Out
If you are moving from one apartment to another, check your lease for the period of time required to notify your current landlord of that move. Since our previous landlord wanted the property for his sister he was very flexible in our move date. If that is not your situation you will need to hew to the contract terms to avoid losing some, or all of your deposit. 

We did a walkthrough of our old apartment with the landlord to make sure that there were no issues/concerns with the way we left the property. We made a point of indicating any maintenance problems that we had fixed, and any improvements that we made that we choose to leave. We had removed all the light fixtures that we added, and replaced them with the bare bulbs that were there when we moved in. We chose to leave a roller-shade that we replaced in the kitchen. 

We had previously sent the old landlord the final utility readings as well as the previous month’s utility statements which included the location codes for the next resident to use to connect the utilities. After the walkthrough, the landlord agreed that there he had no concerns with the condition of the apartment and gave us a date by which he would return our prepaid rent and deposit. And he did so as promised.

Moving In
During our “closing” at the real estate office was the first time that we met our new landlord. After signing all of the documents and paying the deposit and advance rent, we went with our her to our new apartment. The landlord, her husband, and daughter showed us around and gave us more detailed information regarding the apartment.

This included where the utility meters were, as well as us both taking photos of the utility readings to get ready to change over the utilities. They also indicated where the necessary valves were, the fiber and cable TV, how the building and door keys worked and some of the security features of the property. They also gave us the manuals for the appliances and we were pleased to find those included English sections. (You haven’t had fun until you try to figure out how to run a washing machine when all the instructions are in various languages, but not English.) We also tested the appliances and verified the operation of the boiler. 

We arranged for them to e-mail the last utility statement so we would have the location codes to facilitate getting the utilities transferred into our name. As we were in a condominium and the lease stated we agreed to abide by the rules, we were given a booklet with the particulars. Even though we don’t own a car, the lease included a parking space and the landlord showed us where it was and discussed the type of items that could be stored in that spot.

Utilities
We discussed in a previous blog the process of setting up your utilities. The important bit is for the landlord to provide you with a copy of a previous utility statement so you have all of the location codes. Without this it will be necessary for you to call to get the numbers, so your Portuguese had better be up to scratch. We always choose to have the utilities in our name. This provides an ideal proof of address for anyone who requests it. 

There are stories of people who have gotten quite badly burned when their landlord was not quite square with the way they handled the utility payments. We heard one story where the landlord said there was just one meter for two apartments, and the tenants just divided the payment. Turns out one of the apartments was not even legal to occupy which is why they had to handle the utilities this way. Since the apartment wasn’t legal, the landlord couldn’t report the taxes being paid to Finanças. This became a huge problem when the tenant went to renew their residence permit.

Final Thoughts
You might have noticed that we were moving out of one apartment and into another at the same time. Unless you have an incredibly generous landlord, you will end up paying rent on two apartments for that month you are moving. After we moved out, it took several days to clean up the old apartment. We packed most of our stuff in boxes and moved them in a rental car, then hired a moving firm to shift the big items. All of this required time and organization. As we didn’t want to get in a rush, we spent about 2 weeks moving into the new place and cleaning up the old. 

The best advice we can give you is carefully evaluate every step of the apartment acquisition and moving process, ask a lot of questions and seek professional help if you feel you’re in over your head. We adore our new place and are so happy we found just the right apartment. We hope you find one that is perfect for you as well. Boa sorte!