Renting accommodations in Brazil

What you should know if you plan to rent a home /apartment in Brazil.

Since introduction of the new law governing rental property in January 2010 much has change. It has not necessarily been for the better and as yet it certainly hasn’t served either to reduce rents (at least in São Paulo) or to make renting any easier.  For the most part the new law makes the rights and obligations of both leasor and leasee clearer and not much else. It also makes it much easier for a property owner to evict a tenant in the event of non-payment.

Some of the things you should be aware of if you plan on renting property in Brazil.

First of all, by law, there are no short term rental contracts anymore. The term of rental agreements is now fixed at thirty (30) months. This will make it somewhat more difficult for foreigners who are coming to Brazil for work purposes and plan on staying for shorter periods to find rental accommodations. The new law also prohibits any form of sub-leasing property or in any way passing it to a third party without the express approval of the property owner, so this could also be a problem for those seeking short term rentals.

Under the old law, property taxes (IPTU) were the sole responsibility of the property owner but despite this fact they most often passed that cost to the tenant. Now it is even easier to do so and almost without exception you will find yourself paying the property taxes, over and above the rent. This is something that I find completely repugnant, paying the taxes on an asset held by someone else, someone who is already gaining an income from you.

In order to rent one needs to post some kind of security, you will now be required to provide the property owner with rental insurance, a guarantor (fiador) who is himself a property owner and is willing to guarantee your rent gets paid or you will have to pay a deposit of two or three months rent and you essentially act as your own “fiador”.

The new law also makes it much easier for evictions to take place. Being late with payment of rent twice in a year is protected, however on the third delay the property owner can seek an order for eviction effective in 15 days from it being served, so beware.

Other considerations when renting are the additional costs. If , for example, you are renting an apartment aside from the rent and IPTU you will also have to pay condominium fees. These fees may or not be split into internal and external condominium fees. They pay a percentage ot the cost of maintenance and upkeep, electricity and water for common areas, general repairs to the buildings, etc. These condominium fees can be exceptionally high so you could be essentially looking at what amounts to 2 monthly rent payments.

Since most apartment buildings do not have separate water meters the condominium fee also includes water and sewer service. The present laws do not permit this to be divided per person residing in the property. It is therefore divided by unit and is generally based solely on floor area of the unit. A single person living alone in a two bedroom apartment (because he/she wants a guest bedroom, den or office) will then pay exactly the same amount charged for water/sewer as a family having four children who all sleep in the second bedroom, patently unfair. I know of many cases where renters have been faced with paying higher condominium fees because of leaks in the plumbing system somewhere in the building or because another tenant takes in laundry and is using water all day long, essentially operating a business at the expense of other tenants. Also you have to hope that the administrator of the condominium makes water and electric bill payments on time, any fines (multas) for late payments get passed to the residents in form of higher condominium fees. I had this experience in Belo Horizonte when a "Sindica" let one of the owners get many months behind in paying condominium fees and ended up unable to pay the water bills, when the fines started rolling in she passed it on to everybody, not just to the guilty party. That soon changed when I threatened legal action. I don't know about the others but I certainly didn't pay the increased amount due to the fine.

Another serious concern in apartment buildings is insurance. This is more of a worry for owners, but it is a factor that renters must concern themselves with. The Condominium Act provides that the administration (council) must have insurance for all buildings and other structures to cover loss. This is generally part of the condominium fee you will need to pay. It is unclear that this will either be sufficient to protect you from claims by the property owner for damages or total loss as the result of fire. It clearly will not offer any coverage for your personal possessions either. You may want to consider obtaining private insurance to protect yourself. Despite being obligatory some condominium administrations do not arrange for this insurance so beware. If you don't have your own insurance coverage and you are responsible for a fire or some other event that damages or destroys your apartment and/or other parts of the building you could be on the hook for a wopping chunk of money.

In most cases you will only be able to find rentals by dealing through a real estate agency. You should be aware that the administration fees that they charge the property owner will invariably mean an even higher rent gets charged. The only other option is to drive around for hours on end in the neighborhood you desire looking for signs offering rentals direct with the property owner and these are becoming increasingly scarce. Private rentals, while they still do occur, are still subject to the same laws.

Then too you will also have to register your signature at the local cartório (registry) because once you do find a place to rent you will have to sign a contract and have your signature notarized (reconhecimento da firma) which is just another expense.

Outstanding previous debts for gas/water/electric/telephone bills ... watch out for this trap. For some unknown reason such debts are tied to the property, not necessarily to the consumer of those services. If you are renting you might find yourself in the unfortunate situation of being unable to arrange for one or more of those services to be connected due to an outstanding debt of a previous tenant as a result. You will, of course, be able to obtain services by showing up at the particular utility's offices with a copy of your rental contract showing a date which is more recent than the debt. While you thusly aren't responsible for the debt it will create delays in connecting your service and other inconveniences. Make sure to ask either the realtor or property owner to confirm that utility bills are all paid up to date before you sign on the dotted line and save yourself the headaches.

If you are extremely lucky perhaps your employer here in Brazil will arrange rental accommodations for you and you won’t have any of these worries. Otherwise be prepared for a lot of bureaucracy, frustration and time spent on the process. Good luck in either case.