Immigrating to Portugal as a landlord, you may have experienced the concerns of renting Portuguese property to strangers: Is this person serious about their responsibilities? Do they have the ability to pay the rent? If you want to avoid rent arrears, you should be prudent!
To understand your tenant's payment capability, you can request their personal income tax return from last year or their pay stubs from the previous two months. Generally, if the rent exceeds 35% of the tenant's net monthly income, they are likely to struggle with rent payments. If you still have concerns after reviewing the pay stubs, consider speaking with their previous landlord, who will certainly be aware of the tenant's creditworthiness.
When signing a lease agreement, it is essential to have a third party—namely a guarantor—present. Once the third party signs the contract, they will be responsible for any potential rent arrears by the tenant. If the tenant defaults on the rent, the contract can require the third party to pay, even if the tenant's assets have not been fully depleted.
Bank guarantees are another way to mitigate risk. Most landlords are not very familiar with the process of obtaining a bank guarantee, but it is actually one of the most effective options to protect the landlord's interests. To obtain a bank guarantee, all that is needed is a document issued by the bank, which both the landlord and tenant must sign in agreement. With a bank guarantee, if the tenant fails to pay the rent, the bank will cover the payment.