Portugal – the key to good property management and a Golden Visa rush

30 June 2021 | Investment

Partner with the right company

When buying a home in a foreign country, there are many things to be aware of, from rental licenses to local authority regulations – so it helps if investors partner with an experienced, local letting agent or holiday rental property management firm.

Such a company can help you to come to terms with everything you need to know about the market, your rights and responsibilities, whether there are any limits on letting your home out as a holiday let, and where you stand on things like tax relief and other financial considerations.

A good, reliable property management company will put you at ease and take away all the strain of having a holiday home abroad. They will work out the best places to advertise your home, talk you through when peak season might occur in a given location (so you can maximise occupancy rates and the income you receive) and provide local knowledge – such as where the best restaurants and beaches are – so you can pass this on to those renting out your holiday home.

They will also handle the letting process itself, to ensure everything is above board and in place, and deal with any enquiries or complaints as they arise. What’s more, they’ll be on hand to sort any maintenance issues – whether it’s to do with the pool or kitchen – and ensure your home is kept in good condition between stays. They will sort bookings, manage the rental calendar and be on top of all rental payments, so you don’t have to.

The best property management companies will make your investment as hassle-free as possible, so you don’t even have to think twice about how your home is getting on. But they will also tailor their services to your needs – if you want to be more hands-on and in the loop, this could be arranged, while a more detached, hands-off approach can also be facilitated.

The little touches

Nowadays, online reviews on sites like TripAdvisor, Booking.com, Airbnb and HomeAway can make or break a holiday home, as people will more than likely check reviews before booking. But owners can ensure their homes get positive reviews by going the extra mile and standing out from the competition, adding those nice little touches to make sure holidaymakers go home happy after a stay in their properties.

Again, this is where a good property management company really comes into its own, offering the kind of attentive, 24 hour, VIP service that holidaymakers appreciate. Here at Ideal Homes Portugal, for example, we have a number of partnerships with local service providers to ensure that a person’s stay is pleasant, memorable and a better experience than a hotel stay.

Covid has led to people seeking out more space and privacy when they holiday, which has meant a move away from hotels – many of which have had to close their doors during the worst of the pandemic – to holiday homes and self-contained Airbnb-style apartments. Adding in nice little extras, like a welcome pack (with fruit, water, cheese, milk and bread, for example), or arranging for transport from the airport, or having someone there to greet guests when they arrive, can all enhance and improve an experience.

Available but not intrusive

When on holiday, people largely want to be left alone unless there is a problem that needs dealing with. So, while it’s important for a management company to be attentive and on-hand, there is a fine line between that and being overly intrusive.

The best property management companies will understand the importance of this balance and will step in only when necessary.

Time is ticking – only six months left to buy a holiday home in Portugal’s hotspots

In other Portugal-based news, Norton Finance has reminded investors that there are now only six months left to buy a holiday home in the Algarve, Porto and Lisbon using the Golden Visa – and claims re-mortgaging could help people get there.

Although Portugal is currently on the amber travel list, with travel there advised against, people can still travel abroad to purchase a second home granted they follow all the testing and quarantine requirements. The travel exemption, dubbed the Stanley Johnson loophole after the Prime Minister’s Greece-frequenting father, allows people to travel abroad ‘in connection with the purchase, sale, letting or rental of a residential property’.

Norton Finance warns that upcoming changes to current legislation on buying second homes in certain areas of Portugal will come into effect from January 1 2022. This will limit investors who will be unable to buy properties in high demand areas like Lisbon, Porto and the Algarve when using the country’s Golden Visa scheme, which has been open to Brits since January this year.

For those wanting to invest in property in these popular areas, Norton says now is the perfect time to do so.

Why buy in Portugal?

Portugal currently offers two incentivised schemes aimed at overseas buyers which will continue into 2022. The non-habitual residents (NHR) tax regime offers a 10% rate on pensions and tax exemptions on most income from foreign sources.

Meanwhile, the Portuguese Residency Visa Permit (also called the Golden Visa) allows people to live, work and study in Portugal, whilst also allowing travel in the Schengen area freely. After five years, applicants may qualify for permanent residency and even citizenship in Portugal.

What is the process behind purchasing a second home?

Norton says remortgaging or releasing equity from a current home is a popular option for many looking to finance a holiday home overseas.

“You don’t always need the services of a solicitor, but it is always worth checking with your mortgage provider. You will, however, need to have your property valued to determine how much you can borrow,” the team at Norton add.

“Your individual, personal circumstances will determine whether you are able to remortgage your current property. To secure a second mortgage to buy a second home you must be comfortably able to meet your existing commitments.”

It goes on: “To consider taking out a second mortgage, you will, of course, need to meet the requirements of a lender. The lender will be checking you can retain some disposable income whilst managing your outgoings comfortably so you can fulfil the requirements of the loan.”

For tax reasons, Norton says a holiday home is legally not your primary residence, even if you may intend to occupy this home for part of the year. “It is worth considering that the rental of your second home can be a useful option to help finance mortgage payments,” it adds.

“If you have the financial means to purchase a property in Portugal, you can then start your research. It is advisable to speak to as many estate agents in Portugal as possible, so you have the best information about the local market. It is always advisable to have a Portuguese lawyer to work on your behalf to ensure that all legal documents are properly translated and understood.”

If you are looking to invest in a buy-to-let, Norton has a remortgage calculator which aims to give an idea of the current market to help investors decide whether remortgaging to buy a second property is right for them.

Norton advises that if investors are considering borrowing to purchase another buy-to-let property, it’s worth considering that they’ll need a 15-25% deposit.

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