Rent Out your Property in Portugal

After buying in Portugal, you may want to rent out your property for a variety a reasons. However, when you’re not familiar with a country’s ways, it can be a little hard to know how to go about it. At Pearls of Portugal, we not only tell you all about it, but also take care of the entire process for you

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How to rent out your property in Portugal

Step 1: Get the documents together

The renting of a property always involves the execution of a contract between the landlord and the tenant. This contract must be communicated to the Tax Authority and must comply with the rules of the Civil Code and the New Urban Lease (NRAU). For this, you must obviously get your NIF (Portuguese Tax Number)

The energy certificate of the property is also essential. This document proves the energy performance level of the property and must be requested at the ADENE (Energy Agency), if you don’t have it yet. In order to obtain it, you will have to submit a copy of the property’s floor plan, the caderneta predial urbana, and the property technical file.

When signing the lease contract, you must show the tenant the energy certificate for the house. Fines for not having this document are between 250 and 3,740 euros.

STEP 2: Determine the rental price

To figure out the amount of rent you should charge, you need to not only evaluate the national and regional real estate markets, but also account for the monthly charges of the property. These are some expenses to take into account:

  • IMI – Municipal Property Tax;
  • Tax on rent;
  • Condominium fees;
  • Multi-risk insurance;
  • Maintenance expenses in the property.

In addition, the characteristics and location of the property are essential for rent evaluation. Doing a comparative search by searching for properties in the same location and with similar characteristics can help. Some websites that can be very useful during this time are INE and Idealista. DECO Proteste also offers a rent price simulator

For example, rent in the centers of Lisbon and Porto is completely different from the suburbs of both cities and there’s an even greater difference when comparing it to the interior of the country. In a neighbourhood like Bairro Alto (a popular option for digital nomads) a two-bedroom apartment is around 1300€, whereas in the suburbs it can go for ~1000€. Meanwhile, in the interior of Portugal you can find one for ~500€. 

STEP 3: Advertise your property

If you haven’t thought of it yet, this is definitely the moment to consider hiring an agent or company like Pearls of Portugal, especially if you’re not living in Portugal at the moment. This agent can then advertise your property through online rental platforms, real estate agents, or local classifieds. The advertisement should include detailed descriptions of the property, good quality photos, and all the rental terms and conditions. 

rent out property portugal
‘Mais Habitação’ tax benefits

In March of 2023, the ‘Mais Habitação‘ habitation program was announced by the prime minister. Amongst many other measures, the program included various benefits for landlords who put their properties up for rent under the Affordable Rent Program. These are:

  • Total exemption of VAT rate on construction/rehabilitation works 
  • IMI (Property Tax) and AIMI exemption for three years after rehabilitation
  • Stamp Duty exemption 
  • Total exemption from the payment of IRS on income derived from rent payments
STEP 4: Screen potential tenants

Once you receive inquiries about your property, you’ll need to screen potential tenants by evaluating their conditions and character, asking for references and verifying employment and income.

STEP 5: The rental contract

To rent a property, you have to make a rental contract and communicate it to the Tax Office. This communication must be made electronically, through the Finance Portal, by the end of the month following the beginning of the lease.

The contract must be signed by all parties and each party must keep a signed copy. These are clauses that must be included in any lease agreement:

  • Identification of all the parties (ID and NIF)
  • Payment schedule
  • Purpose of the lease
  • Term of the contract
  • The amount of time the tenant has to let you know their intention to cease the contract
  • Amount of rent and security deposit
  • Guarantor’s information (if necessary)
  • A description of the state of the property and a list of its original contents 

You can see an example of a rental contract here.

STEP 6: Manage the rental (Landlord duties)

After the tenant moves in, you’ll need to collect rent payments, handle maintenance or repair issues, and comply with any legal requirements or regulations related to rental properties in Portugal.

rent out property portugal
Termination of the contract

You must communicate the termination of the contract through the Finance Portal (Portal das Finanças).

At that time, it’s important to make an inspection of the property and return the deposit to the tenant, if there have been no damages to the property.

Advice when you rent out your property in Portugal

Renting a property can be an excellent way to get passive income. But it is important to oblige by your duties and responsibilities and be careful. Here’s some advice:

  • Take good quality photographs of the property
  • Be completely honest about the condition of the home
  • Think carefully about each clause of the lease contract in order to protect your best interest
  • Be respectful – agree on dates with the tenant to visit the house if needed
  • Before terminating a lease, don’t forget to conduct an inspection of the property to check its condition.

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