When renting a place to live, a written rental contract must always be signed. Even though legislation allows rental contracts to be concluded orally as well, it is much easier in the case of disputes to recur to a written contract to substantiate intent and agreements reached between the parties.
A landlord may be either a private owner or local government (municipality, city, city district). Premises rented out by a local government can be classified as either municipal housing or public housing. Units in municipal housing are allocated to people who are forced to move out of housing in private ownership. Public housing provides shelter for families in difficulties and people who are not coping. Such people can stay in public housing until they have managed to improve their financial security. The tenants must pay for utilities themselves.
Lease relationships
Lease relationships concern two parties – the lessor and the lessee. Lease relationships are governed by the Law of Obligations Act, which lays down general rules for all types of lease contracts as well as special rules for the leasing of business premises and dwellings. It is important to note that any agreement that derogates from the statutory rights and obligations and liabilities of the parties in the residential lease contract to the detriment of the lessee is void.
The lease contract may be concluded for an unspecified or fixed term. In the case of a lease contract entered into for an unspecified term, it is possible to change the rent every 12 months by giving the lessee at least 30 days’ written notice. During the term of a lease contract entered into for a specified term, it is possible to increase the rent of a dwelling only if the margin of its increase and the method of calculation thereof are specified in the lease contract, the lease contract is concluded for a term of at least three years, and the rent is increased not more than once a year.
If the lessor transfers (sells, gifts, etc.) the immovable after the conclusion of the lease contract, the lease contract remains in its original form, but the new owner becomes the lessor. If the lessee wishes to transfer their tenancy or sublet the housing, it is only possible with the consent of the lessor.
In order to settle a dispute arising from a residential lease contract, the lessee or the lessor may refer the matter to a lease committee or a court. The lease committee is established by the local government. The lease committee settle a dispute arising from the leasing of a dwelling within its jurisdiction unless the same matter has previously been brought before a court. The lessor has to pay income tax on the income from leasing their real estate and movable property (such as property in an apartment). Rental income must be declared on an annual income tax return submitted to the Tax and Customs Board.
Preparation of a lease contract
When leasing a dwelling, it must be ensured that the lessor is the owner of the dwelling or is authorised by the owner. In the case of subletting, the lessee must have the owner’s consent. It is not necessary for the lease contract to regulate in detail matters which are, in one way or another, provided for by law and which, for example in the case of leasing a dwelling, cannot be derogated from. However, it is reasonable to specify certain issues in the contract, such as describing the state of the leased item or regulating the payment of utilities. If the contract does not provide for the payment of accessory expenses, the lessor shall pay them by law. However, the parties may agree that accessory expenses shall be borne by the lessee.