Letting homes in Portugal – what do investors need to know? 

11 June 2021 | Investment

Here, the experts at Ideal Homes Rentals outline what you need to know.

Rental licenses

Portuguese rental properties have been licensed for many years, but the licensing legislation was updated in August 2014 ‘to stay relevant with the evolving activity of rentals across the country’.

The most recent change, which came into effect in July 2017, zoned in on how rental properties are advertised online and was seen as another step to ensure compliance and consumer protection.  

The change was anticipated and came in conjunction with authorities clamping down on unlicensed properties. It most affects websites that omit the AL (alojamento local) number when advertising local accommodation in Portugal.

Fines can be steep, ranging from €125 up to €32,500, according to decree-law nº80/2017

Advertising

There are a number of agents and property management companies in Portugal, and a number of property portals equivalent to Rightmove and Zoopla in the UK, where investors can choose to advertise their home for rental.

The advantage of using a property management company or lettings agency to advertise, market and manage your property is that they will arrange everything for you and remain compliant with all local rules and regulations at all times, making your investment as hands-off as possible.

Idealista is Portugal’s largest and best-known property website, and advertises a huge number of long-term rental properties, while social media advertising (YouTube, Facebook, Twitter, Instagram, etc) can in this day and age be a very effective way of getting your property seen, too.

More old-fashioned techniques such as newspaper advertising and appearances in brochures still have their place, too, but have been overtaken by the internet to a large degree.

Those looking to rent out their home on a short-term basis are likely to be best-served by short-let websites such as Airbnb and Ideal Homes Rentals, although certain areas may face restrictions as local authorities try to clamp down on the number of short-let rentals in a given area. Airbnb has, for example, proved controversial in Lisbon and Porto and busy parts of the Algarve for taking away supply from locals as well as issues with anti-social behaviour and property damage.

By working with an experienced property management company, a lot of the potential stress and hassle with letting out a home in a foreign country can be taken away from Brits.

Documents

This will depend on the type of rental home you are offering. If it’s a short-term let through a property management company or Airbnb, for a holiday villa, apartment or home, tenants are only likely to need to provide their passport details.

It’s important to check if there are limits on the length of short-lets in the area you are investing in, to ensure you aren’t breaking any rules. Again, an experienced lettings agency/property management firm can help here by ensuring you’re staying on the right side of compliance.

If you are providing a longer-term let, perhaps to a digital nomad residing in one of the big cities, or a family looking for a new way of life in the Portuguese countryside, tenants will need to sign a tenancy agreement (contrato de arrendamento) to rent a property in Portugal, and will also need a Portuguese fiscal number (numero fiscal de contribuinte).

Like in the UK, the tenancy agreement will set out the length of the lease, when the rent will be reviewed, and how much notice tenants must provide before moving out.

Tenancy contracts in Portugal should include the details of the landlord and tenant, general information about the property, how long the contract will last, and how much the rent will be and when this will be paid.

Much like the UK, again, tenancy contracts can be open-ended or fixed-term – if you opt for the latter, as many will for the extra security and stability this provides, the length of the term and the expiry date must be clearly outlined in the contract.

You should also set out conditions for what tenants can and can’t do – are they allowed to smoke? Are they allowed pets? Are they allowed to sub-let? – so it’s clear when these rules have been broken.

Inventories – photographic, written and video – are also a very wise move, so you know the condition of your home and its contents before and after a tenancy.

There are many other things to consider when letting a home in Portugal, from health and safety to council tax, which an experienced property management company can help with.

<!– LinkedIn –> This post has originally been featured in Property Investor Today.