By Rob Sawers, Contributing Reporter
RIO DE JANEIRO, BRAZIL – Anyone who has made the transition from ‘temporado’ to resident by signing a long-term rental lease in Brazil knows that finding the right apartment is just the first step in settling into a new home. Perhaps the biggest roadblock for foreigners, beyond negotiating an affordable apartment in Rio’s sky-high real estate market is an additional line item on the budget called the ‘seguro fiança’ – or insurance deposit.
Americans and Europeans might compare it to a security deposit, but the seguro fiança is not returned or applied to the rental costs. The seguro fiança is a form of insurance that a renter pays which in effect combines a down-payment, a credit and tax history check, and requires proof of income, all conducted through a third-party insurer.
The insurers that offer the seguro fiança service conduct this risk assessment to verify if the renter is reliable and capable of paying rent for the full duration of the lease, which is usually thirty months (2.5 years). Realtors often require the seguro fiança if the renter is not able to provide a local guarantor, or fiador, in Portuguese.
The fiador is much more accountable than most foreigners are used to thinking of a guarantor, and requires a Brazilian who owns property in the area, who literally takes the responsibility for the full lease term. Few Brazilians have this type of patron available, and even less-so for foreigners, so the seguro fiança has become the norm.
Though time-consuming, this requirement does significantly protect the realtor, in that they can be comfortably certain that they will not be taken advantage of or lose money on the property. The cost for the renter is significant however, as the seguro fiança is typically two or three times the value of a month’s rent, plus condominium fees and taxes.
For example, someone looking for an apartment in the range of R$2,500 monthly rent, add on another R$500 in condominium fees and taxes, and then up to three times that amount is the cost to move in, R$9,000. Don’t forget in Brazil appliances are not included, so renters need to purchase or bring their own stove and refrigerator as well.
One British expatriate living in Rio, we’ll call him Don (wishing to remain anonymous), was required by his new landlord to get this insurance. “Finding a flat that you like is only the beginning. The paper chase for the seguro fiança is probably the hardest part of the whole moving process, and certainly the most painful.”
Even finding a broker to provide the insurance is difficult for anyone less-than-fluent in Portuguese. Don describes: “There are only two companies that provide a seguro fiança service in Rio (that I could find). For both of these, you need to have a clean tax record, and above all a proof of income that will cover all the expenses of renting the flat. It means basically that you have to have a well paying job, with a signed carteira de trabalho (work card), and a work contract.”
One such company is Corretora Brokers de Seguros Ltda., based in Copacabana. The company did not respond to our inquiries even when referred by a real estate company regarding an apartment rental.
The housing search in Rio generally starts on zap.com.br, the classifieds section of O Globo, but the majority of these apartments do require a lease, a fiador or the Seguro Fiança, and a very long time commitment. So foreigners in Rio might have better luck with roomates, long-term temporary apartments, often found in the classifieds. Probably the easiest way, though, is to know someone personally and arrange an informal sublet.