10 Jan 2019by Admin
Essential Guide to a Successful Short-term Rental
Portugal is fashionable and the tourism awards recently achieved have contributed to an increase in tourists who have fuelled the economy development in the short-term rental business.
How many of us have thought about earning extra money from our home or the vacation home or investing in real estate?
If you answered positively, then you have thought to make the property available for short-term rental and place an ad on an online rental platform and see the money coming into your bank account … Well, it does not work so smooth. Short-term rental activity is regulated and some requirements are needed to comply with the Law. Online platforms also have some rules and differ from one another.
1. Find out about the required legalities
The concept of short-term rental in Portugal (AL) was created in 2008, but it was only in 2014 that it started to have its legal form, through Decree-Law no. 128/2014, of August 29, later supplemented by Decree-Law no. 63/2015, of April 23, which expanded the regime of hostels and defined some aspects of the legal regime, and recently revised by Law no. 62/2018 of August 22, making certain requirements. Since then, to be able to carry out this activity, it has become mandatory to make a communication to the City Council, through the Single Electronic Place to request the attribution of the AL.
In addition to the basic registration, there are also other legal obligations:
- It is necessary to ensure some safety conditions, such as a first aid kit, fire extinguisher or a fire blanket, if you have a space that accommodates less than 10 people.
- You should have a complaint book, just like any other business.
- You also need the energy certificate, which is required by law.
- Provide an accommodation manual in at least 3 languages in addition to Portuguese.
- You must notify the SEF (Foreigner and Frontier Bureau) whenever you host foreign clients, and you must register with the SEF in order to make such communication secure.
2. Attention to tax obligationsThe income obtained through short-term rental activity may be taxed through category B as a self-employed person or by category F, a hypothesis which has only been in force since 2017. If you choose category B – under the simplified scheme – the applied coefficient is 0.65, that is, it pays taxes on 65% of the income and the remaining 35% is considered activity expense. If you opt for category F taxation (the most common framework for long-term rental), you may choose to include income or self-tax at the rate of 28%.
3. Research short-term rental platforms
Research and research each of the online rental platforms. There are some more targeted for tourists house rental, others for students. The Airbnb platform is one of the largest and most popular to place ads, but others to consider, such as HomeAway or Booking. Each platform has its own rules and charges different commissions, as the pricing policy for guests is variable according to specific parameters.
4. Be aware of platforms rules
Terms and conditions are subjects we usually do not have patience to see. Make habit of reading the rules of each online rental platform and understand how to act in case of litigation or what guarantees you have access to.
For example, on Airbnb, once your ad is online, the Host Warranty is activated. This warranty protects your home and belongings from accidental damage. HomeAway, however, allows you to take out an Insurance whose cost can correspond to 5% of the rental’s value, which covers personal liability, among other things, but also imposes other rules such as you can only rent an entire space, so it is not allowed to rent rooms.
Still, some predict certain situations to avoid conflicts between the owner and the tenant. Most follow a cancellation policy on reservations made, some more flexible than others. In some cases, full reimbursement of the booking amount is possible and in others, there are penalties.
5. Define your own rules
Another point to consider, before disclosing your space availability, to avoid situations such as those referred to in the previous point, are the rules of the house. Airbnb platform advocates this system. The rules help to set guests’ expectations in face of the stay. The rules can set up a ban on smoking, banning parties and check-in and check-out times, among others. Guests need to confirm they agree to the rules of the house so they can book your space and can not claim ignorance in a problem’s situation.
6. Create a saving for any future problems
There have been many stories of guests stealing or destroying the house, some real others not so much … although there are guarantees or active insurance on the platforms. But these cases are not always solved with the necessary speed between stays. Also remember that small things can happen, like an appliance that has stopped working, a clogged toilet or the guest’s keys accidentally lost. So it is always good to create savings for any eventuality, such as, 10% of each booking.
7. Recall recurrent expenses
In addition to the bills for water, electricity, gas and communications is necessary to take into account all the products to a spotless cleaned house as well as those to make your guests comfortable: toilet paper, cleaning products for the kitchen and bathroom, etc. If you can get them in large quantity or in discount at supermarkets is a way to cut costs.
8. Reviews and messages are crucial
On Airbnb platform it is very important respond to every guest message since this can increase host status. Encouraging reviews from guests to see your short-term rental strengths and what need to be improved also helps you to reach a super-host status and consequently raise your ad in the search results, especially favourable in the off-season.
9. Analyse the competition
As in any business it is important to know what your competition does, especially on prices, so that your offer is not overpriced. If your accommodation is close to some point of interest such as beach, museum or university, are factors to take in mind and can get you a value increase. Also remember to check prices in the off-season because your offer may be out-of-order and may not reach the desired levels of occupancy.
10. Hire a Professional
Short-term rental activity requires a lot of work and time. Along the legal requirements, it is necessary to be available to receive guests, do everything to make sure your house is ready and verify it’s in order between stays, be on top of market rental prices to make sure most occupancy. If you do not have this availability, you can consider using the services of a professional company such as Hostbelieve. We are present in Lisbon, Cascais and Costa da Caparica.