How to choose a property management company in Portugal

Choosing the right property management is vital.

Owning a holiday home is a wonderful dream, but it can also become a challenge. If you're not present regularly to maintain the garden, pay bills, or service the boiler, you might face unpleasant surprises upon your return. Even without major issues, you might find yourself worrying: Have the pipes burst? Have tiles blown off the roof? Has the garden become overgrown?

A reliable property management firm can alleviate these concerns. Fortunately, Portugal has a well-developed property management market, especially in main tourist areas like the Algarve, Porto, Cascais, and Lisbon. In more rural regions, options may be more limited. Many firms are English-speaking, simplifying communication. In Lisbon and Porto, popular tourist destinations, some managers specialize in short-term rentals, which can significantly enhance your property's returns compared to long-term leases. The best of these managers offer guest services and maintain the property to high standards.

Some resorts have their own management teams. For instance, Quinta do Lago manages any property within the resort, assisting with marketing and ensuring your property is maintained to the resort's standards. An added benefit of a good property manager is their input on furnishing choices and décor.

If you're planning to rent out your property short-term in Portugal, obtaining an Alojamento Local (AL) license is essential. This license legally permits you to offer short-term rentals and is mandatory for listing on platforms like Airbnb or Booking.com.

Acquiring an AL license involves submitting the required documentation to the local municipality (Câmara Municipal) where your property is located. The process can be time-consuming, and all application forms are in Portuguese. A reputable property management company can assist by handling the application on your behalf, ensuring compliance with all regulations.

Property managers also play a crucial role in marketing your property. Many have their own websites, especially those based in resorts, promoting both sales and rentals. Others utilize platforms such as Airbnb or Booking.com. They typically provide services like professional photography, detailed property descriptions, and setting competitive rental rates to minimize vacancies.

Additionally, property management companies handle administrative tasks — collecting mail, paying bills — and property maintenance. Some even offer concierge services, including arranging extra beds or cribs, airport transfers, and more, enhancing the guest experience and potentially increasing your property's appeal.

Renting out your property through a management company in Portugal involves certain costs. Most property managers charge around 20% of your rental income as their fee, plus an additional 6% VAT.

Additionally, rental income is subject to taxation. Non-residents are taxed at a flat rate of 28% on rental income. However, you can deduct expenses such as maintenance, repairs, insurance premiums, local property taxes (IMI), and property management fees from your taxable income.

Choosing a reputable property manager is crucial. Membership in organizations like the National Association of Local Lodging Establishments (NALLE) or the Association of International Property Professionals (AIPP) indicates a commitment to professional standards. It's advisable to interview potential managers, check references, and ensure they are knowledgeable about current tourism laws and local developments.

Alternatively, you may consider managing your property yourself. This approach is common among owners who prefer long-term rentals, such as a three-month lease during the summer, while using the property themselves during off-peak periods. However, self-management requires significant time and effort, so weigh the costs against the demands on your personal resources.