Uruguay Rental Laws: Pro-landlord, Neutral or Pro-tenant?

Uruguay's landlord and tenant laws are judged by the Global Property Guide to be slightly Pro-Tenant between landlord and tenant. Uruguay’s rental system is legally balanced, but in practical terms, it slightly favors tenants, especially with regard to eviction protections and lease continuity. Landlords can still operate successfully with proper contracts, due diligence, and legal guidance.

Rents: Can landlord and tenant freely agree rents in Uruguay?

In Uruguay, landlords and tenants can generally freely negotiate and agree upon the rent amount for a lease. The rental price is set by mutual consent between the parties at the start of the contract.

However, there are a few important points to keep in mind:

• While the initial rent is freely agreed, rent adjustments during the lease are often regulated by law or contract terms, commonly tied to inflation indexes like the Consumer Price Index (CPI).

• Lease contracts must comply with the Ley de Arrendamientos Urbanos (Urban Leasing Law), which governs rental relationships and includes protections for both parties.

• In some cases, particularly for long-term leases, laws or regulations may impose limits or conditions on rent increases to balance tenant protection and landlord rights.

So, while the starting rent is negotiable, periodic adjustments usually follow agreed-upon formulas or legal guidelines.

Security Deposits

In Uruguay, it’s common for landlords to request a security deposit equal to one or two months’ rent. While some landlords may require a guarantor, alternatives like prepaid rent or rental insurance policies can sometimes be accepted instead. Rent payments are typically made on a monthly basis, with tenants generally responsible for covering utilities such as electricity, water, gas, and internet. For added legal protection, rental agreements are usually signed in the presence of a public notary.

What rights do landlords and tenants have in Uruguay, especially as to duration of contract, and eviction?

Regarding the duration of contracts, leases are generally fixed-term, often lasting between one to three years, though the parties can agree on other durations. Once the fixed term ends, contracts may be renewed by mutual agreement. For residential leases, there is also the option for tenants to extend the contract under certain conditions, providing some security of tenure. Tenants are typically responsible for paying rent monthly and covering utility costs. Landlords must respect tenant rights and cannot terminate leases arbitrarily. Meanwhile, tenants must abide by contract terms, maintain the property, and pay rent timely.

How effective is the Uruguayan legal system?

When it comes to eviction, landlords can only evict tenants for legally recognized reasons such as non-payment of rent, breach of contract, or if the landlord needs the property for personal use. Eviction requires following a formal judicial process, which involves notifying the tenant and, if necessary, initiating legal proceedings. The courts oversee eviction cases to ensure due process is respected. Eviction is not immediate; tenants have the opportunity to respond and remedy breaches before removal.

The Uruguayan legal system is widely regarded as one of the most effective and reliable in Latin America. It is known for its transparency, independence, and relatively low levels of corruption, which contribute to a strong rule of law and predictable enforcement of contracts, including in landlord–tenant matters.

Legislation

Landlord and tenant relations in Uruguay are primarily governed by the Urban Leasing Law (Ley de Arrendamientos Urbanos), codified in Law No. 14.219, along with its subsequent modifications.

This law regulates leases for urban residential, commercial, and professional use. It outlines key aspects of the rental relationship, including:

• Lease duration and renewal

• Rent setting and adjustments

• Security deposits and guarantees

• Rights and obligations of landlords and tenants

• Conditions and procedures for eviction

In addition to Law No. 14.219, general provisions of the Uruguayan Civil Code may apply, particularly for matters not explicitly addressed in the Urban Leasing Law.

Brief History: Recent changes in Uruguayan landlord and tenant law

Lease agreements were originally regulated by the Civil Code alone, which only touched those aspects of rent agreements not expressly covered by the parties' mutual agreement.

But mandatory rules to protect tenants and to limit the parties' free will were established on December 16, 1927, by Law 8.153. The next major legislative step was Decree-Law 14.219, enacted on July 11, 1974. Despite amendments, its main framework is still in effect.