According to JLL data. According to declarations and announcements of developers and operators, in the next 5-6 years the total number of residential premises rented in the institutional rental model may exceed 60,000. Institutional leasing is therefore becoming more and more popular – both among apartment owners and tenants. What is institutional leasing and who can benefit from it?
How does the law regulate apartment rental?
According to the law, the apartment should be rented on the basis of a validly signed contract, which will regulate in detail the rental conditions, as well as the obligations and rights of both parties – the landlord and the tenant.
Until 2017, landlords could rely on the following provisions:
- Civil Code,
- Act on occasional rental (Act on the protection of tenants’ rights, municipal housing resources and amending the Civil Code).
However, the regulations related to occasional rentals only apply to rentals by natural persons who rent an apartment from a private owner. Therefore, companies operating in the field of renting premises could not benefit from the Act on occasional leases.
Therefore, in 2017, a new legal solution appeared, described in the Act on the National Real Estate Resource – institutional lease.
Find out more about the differences between occasional and institutional rental →
What is institutional leasing?
Institutional rental is a solution for companies and entrepreneurs whose business involves renting residential properties that they own. This form of rental can be used by entrepreneurs who rent real estate as part of their business.
In turn, for a person who rents an apartment, this means that he or she concludes a lease agreement not with a private person, but with a company that rents apartments on a larger scale.
What else are the characteristics of institutional leasing?
Institutional leasing appliesonly to residential premisesthat serve to meet the housing needs of the landlord. Therefore, entrepreneurs renting tourist or recreational premises cannot use this form of rental.
An apartment under institutional lease can be rented for any long period of time. Renting an apartment for more than 10 years does not transform the contract into an indefinite-term contract (as in the case of occasional rental). Therefore, the company can rent an apartment for even 20 or 30 years. For this reason, those looking for apartments perceive institutional rentals as an alternative to purchasing an apartment with a mortgage loan.
Institutional lease agreement – what does it include?
Institutional rental may be concluded only on the basis of a written agreement that specifies the duration of the lease and the terms of the lease. The contract should include:
- detailed description of the property,
- financial conditions (rent, utility fees, administrative fee),
- mode for leaving the premises,
- owner’s declaration of legal title to the property.
A mandatory element of institutional lease agreement is the tenant’sdeclaration that in the event of the expiry of the agreement or its termination, he voluntarily leaves the apartment and is not entitled to social or temporary housing (the so-called seven), which is granted on the basis of Art. 777 § 1 points 4 – 6 of the Code of Civil Procedure.
Such a declaration must be attached in the form of a notarial deed.
