Renting by Owner: Holiday Home Expenses

As property managers based in the Albufeira, one of the most frequently asked questions we receive is regarding the ACTUAL cost of owning property here in the Algarve.

Although expenses can vary drastically, the following information is based on the absolute minimum amount we have personally come across to successfully run a holiday apartment.

Mortgage repayments

Variable - although with apartments on the market for as little as €50k, many owners choose to purchase outright.

Insurance

€180+ per year – based on cover up to €25,000, subject to an excess of €500.

According to Decree-Law n.º 128/2014, of 29 August, there are no specific obligatory insurances required to operate as a holiday accommodation establishment, however it is advisable to obtain public liability insurance, (Seguro de Responsabilidade Civil), to cover accidental damage and loss of property. Popular insurance companies include Fidelidade and Axa. Also ask in branch at your Portuguese bank as they also have insurance products available and you may qualify for special discounted rates.

IMI (Municipal Property Tax)

0.3% - 0.5% per year on all urban property - IMI is calculated at a rate of 0.3% - 0.5% of the net asset value (as opposed to the sales price) of your property. It is up to each municipality to define what rate it will charge each year. The net asset value of your property, or ‘valor patrimonial’, can be found by logging on to the online Finanças portal.

Condominium Fees

Applies to apartments only - to cover the cost of maintenance, cleaning security of grounds and common areas. The amount of the fee is determined by your condominium association and usually represents a proportionate share of total expenses based on the size of the condominium unit.

€500+ per year – based on a small apartment in Albufeira centre located in a tourist complex with communal gardens, pools etc.

€150+ per year – based on a small apartment in Albufeira centre located in a residential building without pool or gardens.

Utilities etc

€25+ per month when unoccupied - even when your property is empty, you are still required to pay a connection fee for your utilities, broadband, phone line etc. Even the absolute minimum (electricity and water) will set you back at least €25 for every month your property remains vacant.

Towels, Linens and other essentials for your guests

We recommend 2-3 sets of towels per person and 2-3 sets of bedding per bed. Laundry items do get make-up/suntan lotion stains easily and will need replacing often. If you are renting out to families with small children, expect to replace items even more frequently.

You will also need to keep your holiday home stocked up with the basics for your guests: toilet roll, hand soap, bin bags and cleaning supplies.

In addition, you might want to provide your guests with a few essentials on arrival: tea, coffee, bottle of wine...

Maintenance and Repairs

With back-to-back bookings over summer, your property will require regular upkeep and maintenance, carried out off-season in preparation for the next round of bookings.

An electrician or plumber will charge at least €30 for a small job. Don't forget that VAT may be added to the quotes you receive, currently at 23%.

Furniture will need to be replaced quicker than if your holiday home was strictly for personal use only.

Self-Advertising (Renting by Owner)

3-5% commission per booking – plus extra fees for a property management company to carry out the jobs you can’t do yourself. For further information about where to advertise, click here.