Renting your property

With so many blue-flag beaches, award-winning golf courses and good restaurants, it is no wonder holidaymakers flock to Portugal year after year. Renting out your property is a good way to cover the ongoing costs of a holiday home, and can be a genuinely profitable enterprise.

In theory you advertise, take the booking, and count the euros. In practice there is a little more to it. What follows covers short-term holiday rentals — the rules for long-term letting are different.

Paperwork

You will need to register your property with the local council (câmara) and meet a set of requirements to gain the licence. Your property must:

• Be in perfect condition, with all equipment working properly
• Be connected to mains water, or have a private licensed supply
• Be connected to mains sewage, or have a septic tank sized for the maximum capacity of the lodging
• Have hot and cold running water
• Have at least one window or balcony opening directly to the exterior for ventilation
• Be furnished and equipped accordingly
• Have window blinds
• Have doors fitted with a security system ensuring privacy
• Have a fire extinguisher, fire blanket and first aid box
• Hold a Complaints Book — this is mandatory

Choosing a management company

There are hundreds of companies in Portugal who will manage a rental property. They handle routine maintenance, cleaning, laundry, and meeting guests on arrival.

Choose wisely. Just like estate agencies, management companies range from highly professional, well-established businesses to outfits who operate without much attention to the law. Before handing over your keys, do proper research and insist on speaking to existing clients. Mistakes here are costly at best.

Tax

When arranging your AL licence you will also have informed Finanças that you are starting an activity, registering either as a sole trader or through a company. If you are not resident here you will need a fiscal representative — although the requirement was abolished for EU citizens, it still applies if you have income in Portugal.

Once you are earning from the property it is a legal requirement to declare it and pay tax, regardless of where you are resident. As a rule your liability is 28% of net rental profit — but there are plenty of related expenses you can offset against income, so keep that in mind when modelling returns.

Keep it legal

With so much paperwork and tax it can be tempting to take a selective approach to your obligations. There will be expats who tell you they have been renting on the side for years and nobody has batted an eyelid. It is both wrong and risky.

Going it alone

Plenty of owners manage everything themselves. It cuts out the middleman and their fees, and lets you advertise where you want and accept bookings when it suits. The internet has given everyone a shop front, and going it alone certainly maximises profit — as well as giving you the chance to meet people from all over the world over a welcome drink by the pool.