What Every Homeowner Should Know Before Becoming an Airbnb Host in Lisbon

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Lisbon's Rental Regulation

Lisbon has specific rules in place for short-term rentals (periods of 30 consecutive days or less), locally referred to as "Alojamento Local" or "AL." Before listing your property, it’s essential to be fully aware of the legal requirements to avoid fines or potential shutdowns.

Key regulations in Lisbon include:

• ‍Registration is required: You must register your property as an Alojamento Local (AL) with the local municipal authorities. This registration is a legal requirement for short-term rentals in Portugal.

• Permits are required in certain areas: In recent years, Lisbon has implemented "containment zones" (Zonas de Contenção) in neighborhoods like Alfama, Bairro Alto, and Mouraria, where the number of short-term rental licenses is restricted due to concerns about housing shortages. If your property is located in one of these areas, obtaining a new AL license may even be impossible.
• Annual inspections: After obtaining the AL license, your property becomes subject to inspections to ensure compliance with safety and health standards, such as fire safety equipment, proper ventilation, and emergency exits.

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Skipping this legal process could lead to significant fines and even being forced to take down your listing. Right now, the process to get your property registered as an AL is frozen in Lisbon, so an alternative solution is to contact a local property management company to better understand your options, which might include getting in the medium and long-term stay.

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Tax Obligations In Portugal

Income generated through Airbnb is subject to taxation in Portugal, and homeowners must ensure they are compliant with tax regulations. Whether you are renting out a single room or an entire property, Airbnb income is considered taxable, and here is what you need to know:

• Tax on rental income: Revenue from Airbnb rentals is considered personal income, which needs to be declared in your annual tax return. This income is subject to the IRS tax system (“Imposto sobre o Rendimento das Pessoas Singulares” in Portuguese).
• VAT (IVA): If your rental income exceeds €10,000 per year, you may be required to register for and charge VAT (IVA) on your rentals. Be sure to check if this applies to you.
• Deductible expenses: As a host, you may be eligible to deduct certain expenses from your rental income, such as utilities, maintenance, cleaning services, and property repairs. Keep accurate records of your expenses to ensure you take full advantage of any deductions.

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As an extra tip, we highly advise you to consult with a local tax advisor or a property management company to ensure you fully understand your tax responsibilities and any recent changes to Portugal’s tax laws for short-term rentals.

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Get The Right Insurance Coverage For Rentals

The standard homeowner insurance policies in Portugal typically do not cover short-term rental activities, meaning that if a guest damages your property or suffers an injury, you could be left with heavy bills. While Airbnb does provide some insurance protection through its Host Guarantee and Host Protection Insurance, relying solely on Airbnb’s coverage may not be sufficient, so you might consider these options:

• Update your home insurance policy: Speak with your insurance provider to update your policy or purchase additional coverage for short-term rentals. Many Portuguese insurers offer specific policies for Alojamento Local properties that cover damage caused by guests, liability for guest injuries, and more.
• Airbnb’s Host Guarantee: This provides up to $1 million in property damage protection, but it doesn’t cover every scenario (for instance, wear and tear or natural disasters).
• Host Protection Insurance: This offers liability coverage for guest injuries, but additional coverage through a private insurer might be necessary for comprehensive protection.

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To better understand the options you have and what fits you better, invest some time in research and get in touch with professionals, they will be able to direct you to more complete coverages while saving you some money.

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How To Make Your Property Stand Out

The rental market in Lisbon is very competitive, so if you want to attract guests and earn five-star reviews, your property needs to stand out. Tourists in Lisbon look for comfort, local charm, and modern amenities, so it’s important to ensure your space meets guest expectations.

There are several ways to make your property stand out, but it's important to be aware that it will take time and money to be invested. Here are some tips to implement when advertising your apartment:

• Make sure your space is clean: Cleanliness is non-negotiable in the world of short-term rentals, and anything less can lead to poor reviews and lost bookings. A thorough, deep clean before you start hosting is essential, but ongoing cleaning between guest stays is equally important.
• Renovate your property: You don’t have to overhaul the entire space, but making targeted improvements where needed can have a big impact. Comfortable, modern furniture also makes all the difference, opt for functional and stylish furnishings. Don’t overcrowd the space, but provide enough seating, storage, and surfaces.
• Apartment pictures: Pictures are the most important factor when advertising on Airbnb or anywhere else. Ensure you have a quality camera and good natural light when doing your shooting. Once your photos have grabbed attention, the property description must be well-written, engaging, and honest.

We know it can be overwhelming to renovate, advertise, and manage an entire property by yourself, so you might consider investing in experienced professionals to help you go through this extensive process. Local management property companies know how to better navigate these challenges and already have the contacts you might need.

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Managing Guest Expectations & Reviews

One of the key aspects of successful listings in Airbnb, or any other platform, are high ratings and positive reviews. It will boost your property’s visibility and increase your chances of getting repeat bookings. If you want to achieve them, here is what you should do to keep your tenants satisfied:

• Clear communication: Clear state the rules, check-in/check-out times, and local noise regulations. Respond to guest inquiries promptly to build trust and avoid misunderstandings.
• Quick responses to issues: If guests encounter problems, whether it’s with amenities or local directions, fast and helpful responses can turn a negative experience into a positive one.
• Provide local recommendations: Lisbon is a city full of charm and hidden spots, so tips about cafes, viewpoints, or less-tourist places will give a personal touch to your listing, increasing the chances of getting a good review. In case you also need some tips, check our Lisbon Guide!

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By investing resources into your property, you can turn your Airbnb venture into a profitable and rewarding experience, but be aware that it will demand a lot of your presence. If you prefer a turnkey solution, consider a local property management company, which will save you a lot of time, money, and hassle during this process.

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We wish you success on your journey of becoming a landlord! If you prefer experts to handle all the intricacies of property management for you—discover how our services can help.