Holiday Rental Guide
FAQS when renting out your Portugal Property
Rental Guide for Holiday rentals in Portugal
Q: What is the difference between a security deposit and a booking deposit?
A: A booking deposit is an amount of money that holds the property and designates it for your use and the money is typically put towards the total cost of the rental. A security deposit is a certain amount of money that acts as insurance so that if there are any damages to the property while your guests are there, you can use this money to make the necessary repairs.
Q: Is there a standard security deposit amount for a holiday rental?
A: The average security deposit is close to £200 for entire holiday period. While this is the average, the security deposit amount may be higher or lower and is set by the homeowner based on the value of the items that are provided in the holiday home.
Q: What information in regards to the deposit should be included in my rental agreement?
A: You should defiantly include information about how much the security deposit is, when you will need to receive the deposit and the contract, completely signed, any policies that you have regarding the cancelation of the holiday, and the specifics regarding your refunds that includes how long they will have to wait to have their deposit refund returned to them if there are no damages to the property. (Please note that if a cancellation should occur, you are not entitled to retain the security deposit. You may, however, keep monies from a reservation deposit if your contract is worded as such.) You should also include an outline of what you will consider a violation and how each violation will affect the amount of refund they will receive from their deposit.
Q: Is there a standard amount of time that I should allow the renters to have the signed rental agreement back to me?
A: It is recommended that you do not charge the renters a security deposit until you have received the signed rental agreement. The owners that accept credit card payments typically require a turnaround within twenty four hours, but you should be flexible and provide a little leeway if, for example, you have sent the agreement to them on a Friday and the guests are not able to fax it back until the next business day, Monday. You should allow between three to five business days if you have agreed to accept a check for the security deposit.
Q: Should I show the property as booked as soon as I have requested the deposit and sent out the agreement?
A: It is not a good idea to close out a date until you have the signed agreement and have the deposit from the renters. You should, however, take more inquiries and explain to them that you have potentially booked this time frame. You should always keep them up to date as to if the property is booked and the agreement is signed or if it has become available again.
Q: What is the suggested cancellation policy as far as the deposits are concerned?
A: Your contract can be worded so that a reservation deposit is nonrefundable and as the date of arrival gets closer you can put higher penalties in place if they cancel. If a cancelation does occur and you are able to rebook the dates it will make a good impression on the person that cancelled if you refund any money that you collected in reservation deposits and other payments and keep the cancellation fee. If you want to do business with them again, this may encourage them to book with you at a more convenient time for them.
Q: What do I do if I have already received a deposit and then they cancel the reservation?
A: Sometimes the situation arises when a renter cancels their booking just a day or two after they have provided you with the deposit. In most cases you should accept the cancellation and provide a full refund to them as soon as you can. (Note: You may be required by law to refund the deposit if you do not have a signed rental agreement.) While this is true, you should be able to withhold a small portion for the reservation processing. This is why your cancellation penalties should be made very clear in the rules of your rental.
Caution! Do not EVER return money until you have cleared the funds in your bank account. While it does not happen often, you do not want to find yourself in a situation where someone sent a check that is not valid. If the check that was provided originally turned out to be a bad check and you have sent a refund check to them, you could find that you have just lost that money.
Q: What should be done if the security deposit check bounces?
A: A bounced check may be a sure sign of trouble. First you should speak to the renter to determine if there was a mix-up of some sort and offer them the ability to immediately send another check or to send the payment in another, more secure, manner. If you run into problems the second time you should seriously consider whether you will rent to them or not.
Q: Are there different rules for deposits made on rental bookings that are far in advance?
A: Just like any other deposit, if the booking is for a date that is pretty far off you should still get the deposit right away. You may then want to change the payment schedule so that you receive half of the balance between sixty and ninety days from the arrival date and the final payment from thirty to sixty days before the arrival date. If the renter does cancel the reservation you will still have plenty of time to rebook the property.
Q: Are there certain times that I can withhold money that was sent as a security deposit?
A: The security deposit should not ever be considered a way to get more money from your renters. Your home will have normal wear and tear and sometimes things do get broken. With this said if you, your property manager, or your housekeepers discover a violation of the rental agreement or find damage at the property then it is absolutely acceptable to use the monies from the security deposit to recover the damages. You should be very careful to keep the receipts from the repairs or replacement that you must do. Keep in mind that you should never return money from a deposit until a full walk through has been done on the property. The walk through should be done prior to the guests checking in as well.
Q: What should I gather for proof if I need to withhold a portion or the entire security deposit?
A: In the instance that you need to retain some of the deposit you should make very detailed records of the reason for keeping it and keep the receipts with these records. As an example, if you had to pay your housekeeper to clean for an extended amount of time then you should hold on to the extra invoice. If you find that you need to replace your toaster be sure to keep copies of the receipt.
Q: If the renters cause damage or break something that costs more to repair or replace then the amount they paid for a security deposit, what should I do?
A: The first thing you should do is get pictures and any other documentation of the damage. You should also get quotes and/or receipts for any repairs or replacements that need done. If you do find yourself in a situation such as this and the security deposit will not cover the expense you have several options to consider. You may decide to absorb the cost on your own, if for example, the cost of the damage is a minimal amount (around £50). Another option would be to work with the renter directly to recover the additional costs. Finally, if it resorts to it because the renter will not cover the additional expenses, you do have a right to take legal action. The amount of damage as well as which state you and the renter live in may allow you to take them to small claims court to recover the difference. If you decide on this route you should defiantly consult an attorney prior to filing the suit.
Q: What should be done if the renter denies causing the damage?
A: If a renter claims that they are not responsible for the damages then you should certainly allow them to explain what happened. However, if you have testimony from your housekeeper and they are confident that the damage was indeed caused by this renter, and you have a strong working relationship with the housekeeper and trust them completely, it is fine to explain this to the guests and go with your housekeeper’s explanation. The renter should understand your reasoning and respect your trust in the housekeeper. This is another time that having a check in policy that is clear can be a benefit.
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Colin was very helpful, informative and friendly! He gave us very good advice on the area.