Informative Note

The approval of law no. 4-C/2020 of 6 April established an exceptional regime for situations of late payment of rent due under the terms of residential and non-residential urban lease contracts, as well as other forms of property exploitation contracts, within the scope of the COVID-19 pandemic, throughout the national territory and which expire on 1 April 2020.

I. Residential Rental

  • Tenants

Tenants who have suffered a loss of income may be covered by this measure if it occurs:
a) A drop of more than 20% in household income compared with the income of the previous month or the same period of the previous year.
b) When the tenant’s household effort rate for rent payment, calculated as a percentage of the income of all its members, is or becomes more than 35%.

What benefits will tenants have in this situation?

• The landlord is only entitled to the termination of the lease agreement due to the lack of payment of the rent 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 a period of 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;
• The payment of compensation provided for in Article 1041/1 of the Civil Code shall not be required for late payment of rent falling due in the months in which the state of emergency is in force;
• The provisions of Article 1041/3 of the Civil Code shall not apply during the period of application of this law;
• Tenants, students who do not earn any income from work and the respective guarantors who have a break in their income and are unable to pay the rent of the dwellings that constitute their residence may apply to the Instituto da Habitação e da Reabilitação Urbana (IHRU, IP) for a loan without interest to support the difference between the amount resulting from the application to the household income of a maximum effort rate of 35%, in order to allow the payment of the rent due, and the remaining disposable income of the household may not be less than 438,81€ (IAS in 2020).

 

Information Obligation
Tenants who are unable to pay the rent have the duty to inform the landlord, in writing, up to 5 days before the due date of the first rent in which they intend to benefit from this scheme, attaching the documentation proving the situation, under the terms of an Ordinance to be approved by the Government.

Note: This rule does not apply to payments due on 1 April 2020, in which case notification may be made up to 20 days after the date of entry into force of Law no. 4-C/2020, of 6 April.

 

  • Landlords

This law covers the landlords in the following conditions:

a) who suffer a fall of more than 20 % in the income of the landlord’s household compared to the income of the previous month or the same period of the previous year; and

b) that percentage of the loss of income is caused by the non-payment of rent by the tenants under the provisions of this Act.

c) who have a loss of more than 20 % of their household’s income compared to the income of the previous month or the same period of the previous year, and whose tenants do not have recourse to a loan from the I.H.R.U., I.P., may apply to the I.H.R.U., I.P., for a loan without interest to compensate for the monthly rent, due and unpaid, whenever the household’s remaining disposable income falls, for that reason, below 438,81€ (IAS 2020).

 

II. Non-Residential Rental

  • Tenants

This regime covers:
a) Establishments open to the public for the provision of retail trade and services which have been shut down or have their activity suspended under the state of emergency or by legislative or administrative decision, including cases in which they maintain the provision of e-commerce activities, or the provision of services at a distance through an electronic platform;
b) restaurants and similar establishments, including cases in which they continue to be active solely for the purposes of confection intended for consumption away from business premises or delivery at home, in the context of the application of the state of emergency or any other provision which allows it.

 

What benefits do tenants have in this situation?
• The tenant may defer the payment of rent due in the months in which the state of emergency is in force and in the first month thereafter, for the 12 months following the end of that period, in monthly instalments of not less than one twelfth of the total amount, paid together with the rent for the month in question;
• Failure to pay the rent due in the months in which the state of emergency and the following month are in force may not be invoked as grounds for any form of termination of contracts, nor as grounds for an obligation to vacate property or other penalties;
• The payment of compensation provided for in Article 1041/1 of the Civil Code for late payment of rent falling due in the months in which the state of emergency is in force shall not be required; and
• The provisions of Article 1041/3 of the Civil Code shall not apply during the period of application of this law.