Renting out your property in PortugalBy Advertiser, In Chestertons O & O, Property, Business · 19 Feb 2021, 01:00 · 0 Comments
Those of us dreaming of owning a home in the Portuguese sun usually find those ambitions fuelled by three major factors.
- They wish to fulfil their dream of moving here to make a permanent home in the sun,
- They see the benefits of owning their own holiday home as the perfect bolthole for long or short-term breaks for themselves and their families, or,
- They see it as an opportunity to use savings and/or available funds as a significant long-term investment.
Importantly, the second two factors can be mutually beneficial, should you wish to rent out your holiday home when you and your family are not using it yourselves.
That way not only makes owning a holiday home here much more affordable, but it can also bring in a steady and profitable income stream, making it a highly rewarding investment.
Don’t forget that Portugal is one of the world’s favourite holiday destinations.
In 2019 (pre-Coronavirus) 16.3 million visitors arrived in Portugal from abroad, all of them looking for somewhere to stay, and in total spending around 48.8 million nights in the country.
And that isn’t counting the significant numbers of domestic tourists heading to the country’s holiday hotspots from the big cities in central and northern Portugal, along with those from rural communities enjoying a city or seaside break.
Foreign tourists, too, enjoy city mini-breaks, so if you favour buying a house or apartment in, say, Lisbon or Porto, the opportunities are there too. Make your home pay a dividend by registering it with companies like Airbnb, which could bring in, more or less, £120 per night.
It is calculated, as a ballpark figure, that an Algarve or Silver Coast villa with pool could earn you in excess of £10,000 over the eight-week peak tourist season alone, so the rewards can be spectacular.
Portugal’s summer season does appear to grow exponentially, but even though demand falls off a little during the off-season periods, the country’s excellent and highly-professional tourism bodies are constantly driving programmes to encourage growing numbers of people to visit Portugal during the off-peak periods.
Once the vaccination programme across Europe kicks in and becomes effective, it is expected to open the floodgates on tourism, with those record-breaking figures we showed you earlier likely to be surpassed as people revel in the return of their freedoms to travel and enjoy foreign holidays once again.
So, it really is a good time to contact us here at Chestertons Portugal and O&O Quinta do Lago, and talk to us about securing your own property here in Portugal to invest both in your own enjoyment and in your financial future and wellbeing.
We can advise you on not only buying your holiday home, but if you so wish, to then create a significant income by letting it out. We can point you in the right direction to ensure it is done safely and legally, obtaining the correct licences and safety certificates plus insurance, and to make sure you are paying the right taxes to avoid any pitfalls.
There is a well-connected network across Portugal serving the rental markets for both holiday and long-term letting and it is important to have the right management company taking care of your property, checking guests in and out (it is now a legal requirement to document those guests), looking after the cleaning during the changeovers, pool and garden maintenance etc.
And, of course, for your own peace of mind, this also provides a straightforward point of contact for your guests should any problems arise.
So, make sure you get recommendations you can rely on, and perhaps seek out multiple references to lead you to the most reliable and trustworthy agency. That way you should avoid the handful of unreliable “cowboys” in the sector whose questionable practices can mean your property is not looked after properly and handled in such a way that it could attract bad reviews, damaging its credibility in a competitive market.
Obviously there are far greater rewards from short-term holiday rentals on a “per-week” or “per-night” basis than from long-term contracts.
But the long-term option can also prove attractive as it ensures consistency, especially through the winter months when you may decide not to visit your Portuguese bolthole.
Many people from northern Europe, particularly retirees, enjoy renting in Portugal on a monthly basis from October through to April. And although your rental proceeds are much lower than in the summer, doing it this way provides a guaranteed income through those quieter months.
Of course, the more people out there who know about your property, the more bookings you are going to get. So, you need to market it well, either through setting up your own web page, or by registering it with reputable, well-established villa rental agencies who will post the details on their own internet platforms.
Crucially, you must make sure you do everything legally, by obtaining the necessary licenses and safety certificates, and include your rental licence number on the listed property.
You should also keep records of all the logistical and practical house management details, and a detailed record of income and expenditure which, most importantly, means paying the correct taxes.
You need to know that tax on rental income in Portugal must be paid in Portugal, whether or not you are a resident, and that laws and taxes for long-term rental properties differ from those for short-term lets.
And of course, the amount you pay depends upon whether you are a full-time resident in Portugal, and also the amount you earn from renting out your property. If you are a resident you can include your rental income with the rest of your income.
As with taxes in any country, it is vital that you aquaint yourself with the finer details. For example, Portugal operates a system where, for rentals, only 35% of the total income is taxed.
The remainder is exempt, as it’s assumed this is used to cover operational expenses, so, for example, as a non-resident you could see a headline rate of 28%, but only pay this on 35% of your rental income.
This results in an effective rate of less than 10%.
The newer regulations require you to register the rental property as tourist rental accommodation with the local authority (Câmara) which grants you a rental licence (Alojamento Local).
Obtaining this can involve inspections of the property to ensure it meets all requirements, such as working drainage, door and window security and, of course, proper furnishings and domestic equipment.
They will also want to see a fire safety certificate, fire extinguisher, first-aid kit and an official complaints book, known as a livro de reclamações.
It sounds complicated, but your lawyer in Portugal can help out, or your management company, most of whom are well-practised in this regard, and who can charge less than €1,000 for the complete service.
To sum up, buying a property in Portugal to live there full time is a dream shared by millions.
But buying a property to enjoy your holidays—and to make money from it—is a very, very attractive alternative.