Renting out your holiday home in Portugal?

5 things you need to know

With Portugal becoming an increasingly desirable tourist hotspot, renting out your Portuguese holiday home can be a great way to help fund the cost and upkeep of the property. Websites like AirBnB and Tripadvisor have made it easier than ever to advertise your property privately in Portugal, to rent it out as a holiday home. However, with the popularity of such websites booming, in the last year the Portuguese tourist authorities – like many other countries across Europe – have put rules in place to make holiday rentals safer for all parties.

The government has also clamped down on holiday rentals in Portugal, and is enforcing a long-standing law, which requires anyone providing paid holiday accommodation to record the entry, exit, and identification details of all non-Portuguese nationals using the holiday home.

Don’t let this put you off though! It just means you need to be prepared and ensure you follow the rules before you start renting your property in Portugal to tourists.

Here are five things you need to know…

  1. Make sure you have a valid license

All holiday rental properties in Portugal require an Aljomento Local licence. It is fairly straightforward to obtain this, so long as you meet certain criteria. This includes compliance with safety requirements, the installation of legal signage, a complaints book and first aid equipment. Your property must also be inspected by the local camara (town hall), for a fee, to ensure the property adheres to local regulations.

The license applies to all holiday lets in Portugal, from villas and apartments to rooms in a larger property. Previously people using online platforms, such as AirBnB, HomeAway and Booking.com, for instance, often overlooked this legal requirement. However, to register your holiday home in Portugal on such websites it is now mandatory to have an Alojamento Local license number.

It can be time consuming to obtain a license and can be more complicated if you’re not fluent in the local language, so it’s with considering using a Portuguese lawyer. Costs for this service will vary depending on the size and location of the property. If the property has already been used as a holiday let by a previous owner, you’ll simply require the name on the license to be transferred for a nominal fee. It’s also worth asking your lawyer in Portugal to check whether there are any restrictions on the property in terms of holiday rental potential, before you proceed with a sale.

For a no obligation quote from a solicitor in Portugal or to find out more about how to obtain the Alojamento Local license, contact us on 01244 478 911 or email info@totalbuyingabroad.com.

You can be fined from 3,500-25,000 Euros for not complying with the legislation, so it’s not worth the risk!

  1. Consider who will manage your holiday let carefully

You may wish to manage your holiday home in Portugal yourself, or perhaps a local friend or family member might be able to assist.

Alternatively, if this is not an option there a number of management agencies in Portugal that can help, offering everything from handling bookings, routine maintenance to cleaning and laundry. These vary from professional companies to ‘one-man-band’ outfits, so do your research and make sure their service complies with Portuguese law. Ask for first-hand review and recommendations.

  1. Follow the rules

The Portuguese government requires that all properties in Portugal that are rented out to non-Portuguese nationals on a holiday let basis are subject to the recording of the entry, exit and identification of these individuals. The easiest way to do this is to register via the online portal offered by SIBA (Sistema de Informação de Boletins de Alojamento).

If you’re using a management agent to handle the rental of your property in Portugal, they should manage this for you. However, if you’re using an independent website and running the holiday rentals yourself this is something you’ll need to arrange yourself. Note the SIBA website is in Portuguese, so you may need to brush up on your language skills!

  1. Pay your taxes 

One key benefit of living in Portugal is that you may be eligible to receive your income tax-free, thanks to Portugal’s Non-Habitual Resident tax program. However, this only applies to income earned outside Portugal, so any rental income in Portugal must be declared.

You should budget approximately 28% of your net rental profit, so it’s important to keep this tax in mind when evaluating how profitable such a venture will be. It might sound like a substantial amount, but it’s worth noting that there are plenty of related expenses – such as cleaning costs and management fees, for instance – that you can offset against this income when you file your Portuguese tax returns.

  1. Get insured

Once your property in Portugal is ready to rent out you will need to ensure it’s comprehensively insured. Many UK-based companies offer insurance for holiday lets, but it’s important to make sure that your policy covers you for renting out the property in Portugal, and is not merely a holiday home policy. Does the policy cover public liability insurance? Are you covered for when your property is not occupied? Does it cover you for loss of rent or income?

Consider using a trusted broker or compare a large number of quotes, as prices can vary.

Find out more about Holiday Home Insurance!

For more information on buying a property in Portugal, download our Buying in Portugal guide here, or contact our friendly team on 01244 478 911 or email info@totalbuyingabroad.com.  

 

Article published: April 12, 2018