The Mozambican Lease Agreement

The Mozambican Lease Agreement: Legal Aspects, Formalities, and  Recommendations

Renting accommodation in Mozambique can be a challenging endeavor, particularly in major cities like Maputo, due to a shortage of adequate long-term housing that meets expatriate standards for luxury and utilities. Success in navigating the rental market relies heavily on understanding the legal framework and contractual realities, especially since Mozambique has very few laws protecting tenants.

Here is a guide to the legal aspects and necessary formalities of the lease agreement in Mozambique, along with crucial recommendations for expats.

1. The Legal Framework and Key Legislation

Rental agreements (or tenancy agreements) in Mozambique are primarily governed by several key pieces of legislation:

• The Tenancy Act (Lei do Inquilinato, Decree no. 43 525 of March 7, 1961, and subsequent amendments).
• The relevant provisions of the Civil Code relating to rentals that do not conflict with the Tenancy Act.
• The Rentals for the Housing, Industry, Commerce and Services Act (Act no. 8/79 of July 3).

These laws define the rights and responsibilities of both landlords and tenants, covering aspects such as lease duration, rental pricing, eviction procedures, and maintenance obligations.

A Critical Distinction: The Mozambican rental market is characterized as spatially bimodal.

• In high-end, formal areas closer to the city center, such as Ka Mpfumo, written and signed contracts are common.
• In periphery or peri-central neighborhoods (like Ka Mavota and Ka Maxakeni), the market is largely informal, with the majority of tenants (72%) relying only on verbal rental agreements. This informal nature makes the market insecure, as there are no legal protections in place in the event of a dispute or contract breach.

2. Contract Formalities and Language

Contract Requirements

• Written is Essential: While verbal agreements exist, negotiating a clear and detailed written contract with your prospective landlord is essential.
• Duration: Leases are typically signed on a one-year basis. However, long-term contracts can range between one and two years in the formal market.
• Signatures and Notarization: For written contracts, landlords should sign the contract in two copies. Whenever possible, it is recommended to have the signatures recognized by a notary (notário).
• Registration: Rental agreements made for any period greater than six months must be registered at the Land Registry (Conservatória do Registo Predial).

Language Barrier

Portuguese is the official language in Mozambique. Note that most leases will be written in Portuguese. Expats should enlist the help of a bilingual friend or professional translator to ensure full understanding of the document before signing.

3. Financial and Tax Obligations

Financial terms, including deposits and tax liabilities, must be strictly clarified in the lease agreement:

Financial Aspect Formalities & Legal Context :

Security Deposit Deposits can range from one to three months of rent. The standard practice, especially in expat areas, is often a three-month deposit that includes the first month's rent.

Advance Payment Landlords may require one month's rent in advance (which 60% of landlords confirmed). In high-demand central areas, three months rental advances may be required to cushion landlords against arrears or defaults (confirmed by 33% of interviewed landlords).

Rent Payment Schedule Rent is owed by the tenant until the leased property is actually handed back. Rent is often paid monthly in advance, typically between the 1st and 5th of each month.

VAT on Rent The letting of real property is treated as a "provision of services" subject to VAT. The standard VAT rate is 16% (reduced from 17% in 2022). Many people skip this, but it is technically required by law.

Stamp Duty Any rental agreement made in Mozambique is subject to Stamp Duty at the rate of 2%, calculated on the value of the highest rent agreed for one month.

Withholding Tax If rental payments are made to a non-resident landlord, tax must be withheld at source at a 20% rate.

4. Obligations, Maintenance, and Utilities

Tenant Obligations

Tenants are responsible for the timely payment of rent and generally for the maintenance of the property, ensuring it is handed back in the condition it was received, excluding fair wear and tear. Tenants should promptly notify the landlord of any significant repairs needed. They are usually responsible for paying utility bills separately from the base rent for long-term leases.

Landlord Obligations

Landlords are legally obligated to deliver the property in good condition and ensure the peaceful and exclusive use of the property by the tenant. They must ensure the dwelling meets basic safety and health standards (i.e., is habitable) and maintain essential services.

Utilities

Utilities (internet, gas cylinders, electricity, and water) are usually not included in the rent price, although this may differ for short-term rentals.

• Electricity: Power cuts from the national grid can be frequent and supply inconsistent. Many residents rely on solar backup systems or diesel generators.
• Water: Water delivery is managed by FIPAG and AIAS.

5. Termination and Dispute Resolution

Lease Termination

The lease termination process can vary depending on the terms stipulated in the agreement.

• Notice: If you wish to terminate the lease before the end of the term, you must give written notice to the landlord in advance. The required notice period is typically 30 days, unless specified differently in the lease.
• Grounds for Eviction/Termination: The law allows landlords to terminate agreements due to justified reasons, such as failure to pay rent, substantial property damage, or other breaches of contract. In one common contract example, rent payment delays of over 10 days constitute justified termination.

Dispute Resolution

The primarily informal nature of the rental market means that if a dispute or contract breach occurs, legal protections for tenants are very limited. While the Mozambican legal framework offers options for recourse, disputes are often resolved privately between tenants and landlords in the high-end market. Mediation is often encouraged as the first step in dispute resolution, as it is cheaper and faster than resorting to the judiciary system.

Recommendations: Securing Your Tenancy

1. Prioritize Written Contracts: For any stay longer than a short let, demand a clear and detailed written contract and ensure it covers items like deposit withholding, maintenance responsibilities, and termination clauses.
2. Document Everything: To prevent disputes, meticulously take an inventory of the property, including photographs, upon moving in.
3. Confirm the Utilities Split: Clarify upfront with the landlord who pays for utilities. Note that the tenant is typically responsible for these costs for long-term stays.
4. Immigration Requirements: Be aware that the lease agreement is a required document for obtaining a residency permit (DIRE). You will also need the "Boletim Individual de Alojamento" (Individual Certificate of Housing), which relates to registration at the immigration office upon arrival.