if your house is mortgaged, as it was purchased with a home loan, know that you can rent it. However, despite the law being amended in 2019 there are still some conditions.When buying your house with a mortgage, the bank created a mortgage on it, as a way of guarantee the payment of the amount you lent. The mortgage is only extinguished when the loan is paid off, until then it is mortgaged to the bank. But if before 2019 in many cases leasing it could bring you “complications”, with the entry of Law 13/2019, the situation has changed.
Before the law change
Until 2019, if you wanted to rent the house you had bought using a home loan (for your own and permanent housing), you would have to ask the bank for authorization to do so. And, in most cases, the latter would unilaterally decide review your loan conditions by raising the spread.The reason for the change in financial conditions had to do with the change of end for which the credit had been granted. In fact, when signing the contract, you have to declare the purpose for which it is intended. If you declare that it is intended for your own and permanent housing, the applied spread is always lower Decree-law nº74-A/2017 of 23 June, which partially transposes directive 2014/17/EU on consumer credit agreements for housing, was in force .The decree-law already provided for in its article 25 some situations that prevented financial institutions from reviewing the financial conditions of the loan in the event of renegotiation of housing credit agreements. Due to a change in the purpose of the loan that occurred in the case of leasing to a third party. Also read: My first home: Should I buy or lease?
In what situations was it allowed to lease without increasing the spread?
In fact, even before 2019, there were household situations that, as long as they were proven, allowed the house to be rented (own and permanent housing) mortgaged without any aggravation of the loan conditions. We are talking about situations like:Unemployment of one or more members of the householdjob change for a distance of more than 50km from the property with housing credit that implies the change of the household’s own and permanent housing. divorce, legal separation of persons and property, dissolution of a de facto union or death of the spouse or common-law partner. But only when the loan was held by a single person. And this proves that the effort rate of your household is less than 55%, or in the case of two or more dependents, less than 60%.
What has changed?
In 2019, the text of article 25 was thus amended, failing to make exceptions to the lease to third parties. In the new text, it is highlighted that “lenders cannot increase the charges with the credit whose purpose is to finance the acquisition, execution of works or maintenance of property rights over permanent housing, namely by increasing the stipulated spreads, in the event of renegotiation motivated by any of the following situations: conclusion between the consumer and a third party of a housing lease contract for all or part of the property. the previous three conditions in which only the spread-increasing prohibition applied were retained from the article.In other words: if you want to rent your house, purchased with a mortgage, you no longer have to worry about the possible increase in the spread.
Procedures to be followed
Even though it’s not legal, must inform the bank that he is going to lease the property. However, it is not mandatory. Thus, there are two procedures that you have to ensure when renting the property:In the lease agreement, it must be stated that the property is mortgaged, that is, that it has an associated mortgage loan; And please make sure your tenant does. Also read: Lease Agreement: How to ensure you protect both parties
Home loan before 2019? Law also applies
If the home loan agreement for your tax domicile is prior to 2019 and it says that you cannot rent the house, don’t worry. The law has priority and you should refer this to the bank if it expresses any intention to increase the spread. If you need to, consult a lawyer and you will see that the situation is resolved.
Does renting a mortgaged house have costs?
If you thought about renting the house to have an additional source of income, keep in mind that on the rent you collect you will have to pay IRS. The release fee is 28%, but it may be lower depending on the lease term. And also count on additional expenses. That is, if you still have exemption from Municipal Property Tax, when you rent the house you lose this exemption. In fact, the permanent or temporary exemption from IMI is only granted if the property is intended for permanent housing. This is if it is your tax domicile. When renting, you will have to make a lease that you will have to register in the Finance Department. It is at this point that the Finances are aware that this is no longer their own and permanent home. And for that reason, you lose the right to the exemption. In your accounts, consider this value to be reduced to the annual value of net income. But the good news is that the amount you will pay in IMI may reduce the amount of tax payable. For this you only have to include it in your annual income tax return in the annex relating to rents.
In which cases can there be an increase in the spread?
Even with the entry into force of the aforementioned law, there are still some cases in which the financial institution can change the mortgage loan spread.The law only applies to real estate for own and permanent housing. Therefore, the second home was purchased with a home loan and this purpose was mentioned in the credit agreement, when leasing it (and changing its purpose) the financial institution can unilaterally change its spread.On the other hand, if you had any credit subsidies, for example for youth credit or any other campaign at the time you contracted the credit, you may lose the bonus.Also read: Renegotiate housing credit: 5 situations in which you should do it