Setting up a Holiday Home in Portugal

Here are some simple laws when it comes down to purchasing new properties in Portugal


Owning a new property is an exciting dream that many people have on the horizon. However, when it comes down to actually putting that pipeline plan into action, many have found the situation quickly turning from dream to nightmare. With language barriers, contractual agreements and service providers bombarding you from every direction, the whole property prospect can become overwhelming.

However, it doesn't have to be difficult to get that dream property in Algarve, for example. To make the whole thing much more manageable here are some simple laws when it comes down to purchasing new properties in Portugal:

- Enlist the help of a local solicitor or another specialist company at the time of purchase. Unless you speak reasonable Portuguese, you will need help setting up your agreements with your utility companies- Câmara Municipal for water, EDP for electricity and a local gas supplier.

- You may also want to install a telephone line/broadband connection however, if you are renting-out your property you may want to consider how you can manage your guests’ usage of this.

- To own property or do any official business in Portugal you need a fiscal number. While your solicitor will take care of this, you will also need someone to act as your fiscal representative if you are not planning on living in Portugal full-time. There are a number of specialist companies in Portugal that offer this service.

- All properties are liable to annual property tax which is largely payable in two installments- one in April and one in September, relating to the value of your property. Again your fiscal representative can deal with this one for you.

- Property insurance is also important both for the building itself and contents. Some condominiums or communal buildings include a proportion of buildings insurance in their charges so it is worth checking this in advance. Owners renting-out to holiday makers should take out public liability insurance and take advantage of purpose built rental insurance policies that include cover for accidental damages caused by paying guests.

- Keep an eye on your property, especially if you are not renting. There are plenty of local property management companies who will visit your home on a regular basis, pick up and forward post, check utilities, keep on top of maintenance and address any problematic issues for a monthly charge. However, for a more low-key option you could pick a local friend or contact who can pop in occasionally to check everything is up to scratch.

- The age of your property will be a deciding factor on which option you choose to check on your property. New properties or those under five years are much less likely to experience any problems however, older buildings in Portugal have not been constructed in line with European or UK standards and thus dampness and water damage can often occur.

- A property rented out for periods of less than 30 days should now by law have a tourist license; this was introduced in 2008 to cover aspects such as fire safety, ventilation, security and first aid as well as the general condition of the property. Any management company of your fiscal representative can help you gain this license, issued by the local Câmara Municipal.

- Any income made from the rental of your Portuguese property should by law be declared in Portugal and requires a Portuguese tax return. We recommend you use the services of an accountant to help you through this process.

- If you decide to rent out your property as well as using it as a holiday home this might influence how you furnish your home. Consider practically how many occupants are realistic, it may be tempting to add a sofa-bed in the living room to increase occupancy however, you must think about whether the facilities can support it or whether you run the risk of a cramped living space and dissatisfied customers.

- Equip your property to the best of your budget. Remember the small details make a big difference so make sure you have enough cutlery, china, glassware for the size of your property and adequate towels to allow for a mid-week change.

- Asking for feedback from guests after their stay is a great way of understanding how well your management service is working. More often than not, they will flag-up any problems first.

Ensuring that you have a helping hand in these tricky areas of property owning will go a long way. Not only will you get the most out of your brand new holiday home in Portugal but you also will be well on your way to fulfilling that stress-free-dream you first had in mind…

This article is provided by Helen Jones, Director of Pelican Business Services.