Expat: Property rental in Maputo, Mozambique

As part of the global mobility benefits, expatriates may be entitled to housing or a housing allowance. When relocating to a new country, searching for the right home is key. In Maputo, this may be a challenging endeavour as the market is not regulated and the available accommodation options in better living conditions are usually more expensive than expected.

With the increasing presence of multinational companies, particularly linked to the oil and gas/energy sectors, the on-going work of foreign NGOs and multilateral organisations with substantial housing allowances budgets for their assignees, coupled with the demand exceeding the offer available in the residential and commercial markets, results in real estate increase of prices for properties matching international requirements, modern and in prime zones, which rival those in similar neighbourhoods of the majority of cities in the world. International companies and organisations that are unfamiliar with the Mozambican housing market are an easy target and may be easily led to believe that the rents are non-negotiable, thus contributing to their inflation.

Generally, an expat can be sure that it may take some time to find a property. We would add that it also takes local insight and a killer instinct to secure the right property at the right time and at the right price. In an unregulated real estate market, contracting specialised assistance may prove to be the decisive factor in the search for the appropriate house in which the expatriate will be living in the next couple of years.

Once securing a property, the norm is that, at the beginning of the lease, the tenant pays the landlord two rents in advance, plus the equivalent amount of one-month rent as a security deposit, which should be returned at the end of the contract, in case there are no dilapidations to the property that justify any deduction. From the 3rd month, rent is normally paid monthly. Some owners have the practice of requiring the rent to be paid quarterly (in advance). This option may also be an advantage when trying to secure a property. Brokerage fees are the responsibility of the landlord, so the expat does not have to pay the estate agent.

In terms of taxes, when an individual landlord rents his/her property to an individual tenant, 14% IRPS tax should be included in the rent and it is the landlord’s responsibility to pay it to the tax authorities. When the tenant is a corporate entity, it is his responsibility to withhold the 14% tax in account of IRPS. The general principle of the law relating to the payment of rent by a legal entity (the tenant) to another legal entity (the landlord) is based on the assumption that these payments are subject to withholding tax at the rate of 20% (twenty per cent) under article 62(1) with article 67(1)(c) of the IRPC Code. However, if the corporate object of the landlord company is the management of its own real estate properties, the said withholding tax will not apply. This is because the law establishes an exemption from this obligation under article 68(f) of the IRPC Code.

The tenant is generally responsible for paying his own utilities, such as water, electricity, telephone and Internet consumptions made during the life of the agreement. Water and electricity bills are normally kept under the landlord/landlady’s name. Changing the name on the water and electricity bill is not advisable as it may lead to significant delays in supply. Lease agreements are usually made for a period of 1 to 5 years (one or two being the most common), being automatically renewed for periods of 12 months, provided none of the parties terminate it. As a norm, any of the parties may unilaterally terminate their agreement by written communication to the other party until 60 or 90 days before the date of termination of the agreement. The lack of prior written communication results in the automatic renewal of the agreement.

It is common to find potential properties that need maintenance or refurbishments. In this case, it is usually possible to negotiate with the landlord the execution of the necessary construction works on account of the tenant and the reduction of rent until the landlord has paid such expenses. Alternatively, tenants may also propose to pay rent in advance in order to allow the landlord to carry out the required improvements on the property. In essence, it is crucial that a company or a potential tenant has learnt the basics of the housing market before negotiating a lease agreement, so that potential issues throughout the relocation are easily avoided.

Security improvements, such as electric fences, insertion of safety bars, safety doors, safe havens, alarms and back-up generators are usually not supported by landlords. Tenants should take these costs in consideration. Security is a concern for many international companies, and high-level assignees tend to look for properties inside gated compounds. As there is not enough offer for this option, rents for this type of properties tend to be higher. The most popular residential areas amongst expatriates are Sommershield I and II, Marginal, Marítimo, Polana (including Av. Julius Nyerere and Av. Friedrich Engels).

Managing expectations is a key role when relocating families to Mozambique. It is very important that families know how to deal with lease management/property issues and understand that landlords may have different views. Paying a high price for a property does not mean that landlords will be attending all maintenance issues. Even if willing, they are sometimes unable within the client’s expected time (due to the lack of availability of skilled labour; even though it is possible to find some fairly experienced technicians).

Due to these factors, and to avoid frustration, companies should consider contracting tenancy management services, which can deal with late-night emergencies, managing maintenance and damages, paperwork, having to find contractors, and other tedious and time-consuming tasks.

Maputo’s housing market is constantly changing and the rental prices are unpredictable, making the properties “sold/rented for the highest bid”, regardless of any prior verbal commitment. Therefore, one has to be swift and sign the lease as soon as possible after seeing and deciding on the property.

We see growing signs for demand of property as the rental market is expected to reach high levels. The majority of international recruited staff requires modern or refurbished properties, with high security standards, making the market more selective and raising the competition to secure the best property and making gated compounds a sought and high-priced commodity.

Marta Roff is the Co-founder and Managing Director of Maputo Relocation Solutions