Occasional or institutional lease — which one to choose?

Occasional or institutional lease — which one to choose?

Both lease types give the landlord the same key safeguard: the tenant's notarial declaration of submission to enforcement, which radically simplifies recovering the dwelling. We described the differences, definitions and advantages of both constructions in detail in the article Occasional vs institutional lease agreement — differences and advantages. Here we focus on something else: how to make the decision in your specific situation. The short answer: usually you have no choice — your legal status decides. The longer answer follows below.

The decision tree in 30 seconds

• You rent out as a private individual, outside a registered rental business? Your option is the occasional lease. The institutional lease is not available to you.
• You run a business that rents out dwellings (sole proprietorship, company, fund)? The institutional lease is the right one. The occasional lease is reserved for individuals who do not run such a business.
• Neither matters much to you and the tenant is someone you trust? Consider an ordinary lease — fewer formalities, but also the weakest protection.

The line between "private" and "business" renting can be blurry: with more dwellings and an organised rental operation, the authorities may conclude you are running a business. If you are close to that line, consult an adviser about your case.

Criterion 1: who you are as a landlord

This is the decisive criterion. The occasional lease may be used only by private individuals who do not run a business of renting out dwellings, only for residential premises, and for a fixed term of up to 10 years. The institutional lease is the construction for entrepreneurs renting out dwellings as part of their business — also for a fixed term, but without the 10-year cap.

Criterion 2: costs and formalities

• The notarial declaration — required in both types. The notary's fee for drawing it up is statutorily capped at one tenth of the minimum monthly wage. By custom the tenant bears the cost, although the parties may agree otherwise.
• The substitute dwelling — only in the occasional lease must the tenant indicate a dwelling to move to after enforcement, together with its owner's declaration of consent. This is often the bottleneck: some tenants have no one to indicate. The institutional lease has no such requirement — the tenant accepts enforcement without naming a substitute dwelling.
• Notification of the tax office — the landlord (a private individual) must report the conclusion of an occasional lease to the head of the tax office within 14 days of the start of the tenancy. Without the notification you lose the special advantages of this construction. The institutional lease requires no notification.
• The deposit — capped at six times the monthly rent for the occasional lease and three times for the institutional lease.

Criterion 3: real-life scenarios

• You inherited one apartment and rent it to a family with children. You are a private individual — occasional lease. You gain a simplified path to recovering the dwelling and exclusion of part of the statutory tenant protection; remember the 14-day tax office notification.
• You own three apartments rented long term, without a registered business. Still the occasional lease. At this scale, however, keep checking whether your renting is taking on the characteristics of a business — and order in documents and payments becomes essential. With the Brokik app you can keep the agreements, protocols and payments of all your properties in one place.
• You run a company that bought a portfolio of rental apartments. Institutional lease — the occasional one is out of reach for an entrepreneur. No substitute-dwelling requirement simplifies signing agreements at scale.
• You rent a room to a student for a year and know their parents. Formally an occasional lease is possible, but with low risk and a short term some landlords consciously choose an ordinary lease to skip the notary visit. It is a trade-off between convenience and protection — make it deliberately.
• The tenant cannot indicate a substitute dwelling. If you are a private individual, you cannot bypass this requirement in the occasional lease (the institutional one is unavailable). What remains is an ordinary lease plus careful tenant screening and an adequate deposit.

When an ordinary lease is enough

The occasional and institutional leases are options, not obligations. An ordinary lease can be a rational choice when the risk is low (a verified tenant, a short term), when the tenant cannot meet the substitute-dwelling requirement, or when you value maximum simplicity. Just remember that if problems arise, the road to recovering the dwelling is then the longest — through the courts, with full tenant protection applying.

Checklist before signing

• determine your status: private individual or rental entrepreneur,
• check whether the tenant can indicate a substitute dwelling (occasional lease),
• book a notary appointment and agree who bears the cost,
• prepare a fixed-term agreement (up to 10 years for the occasional lease),
• after an occasional tenancy begins, notify the tax office within 14 days,
• archive the full set of documents: the agreement, declarations, the handover protocol.

Summary

In practice, the choice between the occasional and institutional lease comes down to the landlord's status: private individual — occasional; an entrepreneur renting out dwellings — institutional. The real decision is whether to use either of these constructions at all instead of an ordinary lease — and that depends on your risk profile, the tenant's possibilities and your readiness to complete the formalities. You will find a detailed comparison of the two agreements in the comparison article, and practical information about the occasional lease on the occasional lease page.

This article is for information purposes only and does not constitute legal advice. For individual matters, consult a lawyer or a notary.