Dear Rental Algarve client,
In addition to my earlier letters please find press releases from Algarve News papers indicating that it does not seems to be all good news.
RS
The Algarve Resident
Has D-Day dawned for property rental licensing?
A MEETING was due to be hosted by the Direcção-Geral de Turismo (DGT), the general directorate for tourism, in Lisbon on Wednesday of this week (March 15), the day after this issue of The Resident went to press, to debate the application of Decree Law 55/2002, which regulates the licensing of properties for tourism purposes, reports The Resident’s Caroline Cunha.
This legislation has hit the headlines in recent months (see January 20 and March 3 editions of The Resident) due to the outrage among the tourism sector at the fines being handed down by government watchdog, Inspecção Geral das Actividades Económicas (IGAE), the general inspectorate for economic activities, for non compliance. Much anger and frustration exists among villa owners and rental operators as, in practice, it has been found that it is virtually impossible to obtain the licence required due to the inability shown by local councils to process the related paperwork.
Many representatives from local councils and trade bodies throughout Portugal were expected to attend the meeting, although the majority were expected to be from the Algarve. Macário Correia, president of the Junta Metropolitana do Algarve, Hélder Martins, president of Região de Turismo do Algarve (Algarve Tourism Board), Elidérico Viegas, president of the Associação de Hotéis e Empreendimentos Turísticos (Algarve hotel and resorts association) and José Mendes Bota, president of the Parliamentary Sub-commission for Tourism and MP for the Faro District, were all due to be present, among other key figures.
José Mendes Bota states that he implored the DGT to hold this week’s meeting in order to provide explanations. The MP for the Algarve is demanding that the government immediately suspend the inspections and the handing down of fines, and asks that the deadline to comply with the law be extended until the end of 2007.
Is the Algarve being singled out?
In Mendes Bota’s opinion, the Secretary of State for Tourism, Bernardo Trindade, “is ill informed,” adding that the câmaras are not prepared to issue the necessary licences. “The state has already inspected and fined several villa rental agencies in Albufeira, Almancil and Monte Gordo, but, in the rest of the country, we haven’t heard of anything with regard to this matter,” said Bota, implying that the Algarve is being singled out.
In a report featured in Correio da Manhã newspaper this week, it stated that the only câmara in the Algarve that is equipped to issue the licence is Faro, a situation that clearly makes nonsense of the legislation currently in place.
This is a burning issue, particularly in the Algarve, with many spectators saying that the fining spree is purely a money making exercise on the part of the government, which is desperately trying to balance its gaping state deficit.
According to a reliable source, owner of a private villa in Lagoa that is rented out to holidaymakers, the current legislation is totally unrealistic. “What we hope to achieve with this meeting is a more realistic approach,” he said. “I see myself as a victim of this legislation.
“While trying to find a solution for myself, I met with other owners to discuss the problem. We are asking for a total amnesty for the 35,000 projects involved. This makes sense because it is physically impossible for the Portuguese administration to issue all the licences and solve the problem within the next one or two years,” he declared.
The source explained to The Resident that a group of property owners got together to compile a detailed report, which puts the situation in black and white. “What we need is a quick and easy solution and, therefore, we made some proposals and submitted a report, which, I am certain, is forming the basis for this meeting. I have also been in regular contact with Hélder Martins and Elidérico Viegas,” he said.
The group call themselves STARS (Small Tourist Accommodation Renting Sector), which is made up of owners of apartments, villas, townhouses and private rooms. This self-formed association calculated that, as a result of the unworkable legislation currently in place, 80,000 people could become unemployed, 50,000 of them Portuguese.
With so many fines being handed out, villa rental agencies are on the brink of going out of business and villa owners are being forced to sell up or take their properties off the rental market. This has a direct result on the employment of cleaning staff, gardeners, pool cleaning technicians and many other workers.
“When the government read the statistics in our report, faces turned white,” the source said. “I think they had no idea of the repercussions their attempt to enforce this legislation would have, and only now they are beginning to see sense.”
The source also stated that the investment required in order to comply with the current legislation (alterations required to be made to the property, new architect drawings, and so on) costs 10 times more than what one can earn in a year. “It is ridiculous. Currently, someone renting a single property or part of their home has to have the same licence as a Sheraton or Hilton Hotel,” he said.
In the report, STARS propose that there should be different legislation for hotels and large accommodation villages, and for smaller owners.
The source criticises the Algarve’s câmaras for their role in the situation. “Everyday, this legislation is distorted by the câmaras. They all have different guidelines in place and some, for example Lagoa, even send you back to the DGT saying they have no licensing system in place. This is completely unlawful,” the source said.
“One of our key proposals is that, in the interim period, while the legislation is being re-thought, self legislation should be introduced for property owners, to be administered through lawyers and financial advisors. Property owners can then submit declarations on a regular basis for the authorities to check over as they wish,” the source said. “If this system is approved, we can have a solution within a couple of weeks.”
Whether an adequate solution will be found to suit all parties remains to be seen, but The Resident will be bringing you a report on the outcome of this week’s meeting at the DGT in next week’s edition.
The Algarve News
A number of interest groups and representatives of the tourism sector have returned empty-handed from a meeting organised by the Direcção-Geral do Turismo (DGT) in Lisbon on Wednesday afternoon.
The meeting was called after regional authorities in the Algarve were flooded with inquiries from concerned home owners who had received notification that they would be fined for non-compliance with legislation regulating the holiday letting of private homes.
While none of these notifications have resulted in the payment of fines, regional tourism authorities and interest groups are concerned at the lack of information over law decrees 167 of 1997 and 55 of 2002.
The meeting in Lisbon, intended to remove doubts over the legislation, proved to be little more than DGT representatives reading out the law as it stands, concluding that it has to be upheld, showing little sympathy over problems the Algarve tourism sector could and is experiencing.
Earlier on Wednesday, the chairman of the Almancil Business Association (AEA), Aníbal Moreno, presented the region's case to a parliamentary commission, consisting of members of all political parties.
According to Mr Moreno, MPs from the different parties showed a much greater understanding of the problem, and trusts that a solution could still be manufactured for the problem.
During this meeting, MPs were called upon to present their peers in parliament with a law decree altering certain stipulations of the existing legislation in order to make its application less ambiguous and reduce any potential damage to tourism in the Algarve.
City Halls, who have the licensing power of holiday homes, have, to date, not issued a single licence explains the AEA chief, adding that it is virtually impossible to do so.
In order for the owners of, for example, a studio apartment that is let out in the summer to be in compliance with legislation, "eight different elements have to be verified by six different entities for the apartment to be legal", explains Mr Moreno.
A situation which the AEA chairman terms "ridiculous" and "impossible".
However, he did stress that licensing of holiday homes has positives (once home owners are able to do so), explaining that it will prove that a holiday rental home is duly registered and give tourists additional peace-of mind knowing that their accommodation has complied with stringent legislation.
In the meantime, The Portugal News has been speaking to letting agencies and real estate agents elsewhere in the European Union, and it appears that this licensing law problem is not unique to Portugal.
In comments to The Portugal News, two separate estate agencies in Britain explained that home owners have been given until April 6 to licence their properties for tourism purposes or face fines of £20,000.
Euro weekly
LICENCE CRACKDOWN
SINCE the early days of tourism in the Algarve in the 1960s, resorts and hotel owners and their associations have complained to the government about the large number of unlicensed, and illegal tourist accommodation in the region.
Investors, whose companies worked in full compliance with the law, protested about the serious negative impact on the tourism industry caused by the unfair competition they had to face from the so called ‘parallel beds’.
Portuguese law requires that all properties rented to tourists have to fulfil a series of safeguards concerning safety and comfort. Apartments and villas which are still operating without a licence and have never been inspected put visitors to the Algarve at risk. The government became aware of this problem and, in 1997, a new law was created to regulate this sector of the tourism business.
According to tourism law expert António Nobrega: “It was not easy for the legislator to solve this problem with a simple law which would be easy to put into action by the authorities. After its approval by parliament, and during the following years, the text of the law had to go through quite a lot of changes which were responsible for several delays to the date in which it finally came into effect.
“The final version of the law, which has been in effect since 2002, is also a bit complex. It is not easy for the owners to clearly understand what are the necessary steps they have to take when they wish to register their property to be fully legal to be rented for tourist accommodation.
“So, before taking any other steps, I advise them to go to the town hall of the area where the property is located and ask for instructions because the new law has given the town halls the responsibility of awarding tourist licences to all privately-owned apartments and villas that are located outside hotels or resorts. They should do it immediately because the fines are now quite big.”
António Nobrega also revealed that he is finishing a book on the subject which will be available in two weeks’ time.
Last week in parliament, Algarve-elected MP Mendes Bota questioned the government on this matter asking that the law should be applied only from the end of 2007. The Social-Democrat MP asked the Secretary of State for Tourism, Bernardo Trindade, about the new law which includes severe fines to tourist operators who work with unlicensed accommodation.
Bota asked the government to explain why the Authority of Food and Economic Safety (ASAE) has started to enforce the new law so soon, and has
already made several inspections. In the cases of companies working with non-classified villas and apartments fines ranging from 2,500 euros up to 30,000 euros per apartment have been imposed. He told of a case where ‘one single tour operator had to pay 40,000 euros in fines’.
Bota stressed: “The town halls which now have the power to issue the licences to legalise these properties are not prepared to respond to the requests. There are town halls which have several thousand unlicensed units of tourist accommodation in their areas and they will never be able to give a response in time to such a large number of requests." He added: “If some property owners and tour operators haven’t been working in full compliance with the law, the Portuguese state is also to be blamed because it knew what was happening in the tourist sector for many years and never took any action to solve the problem.
"There currently reigns a great apprehension in the tourist sector. There have been inspections and punitive actions, but the town halls have also been showing they don’t have the operational capacity to perform the thousands of technical inspections necessary for the issue of the licences that have been recently requested. I feel that people have now only two alternatives: to remove the properties from the tourist market and close the door, or maintain them, running the risk of an inspection and closing down because they don’t have enough money to pay such high fines," he said.
Mendes Bota said that ‘the law should not be enforced before the end of 2007, to give enough time to the town halls to be prepared to face the situation and also to give time to property owners and tour operators to gather information on the subject’.
Secretary of State for Tourism said any further delays
in the enforcement of the law would only benefit the transgressors. Bernardo Trindade said that, in 1997, when the government decided to change the process of licensing tourist resorts, it had already announced the transfer of responsibility to the local authorities. The law already had a two-year time period in which property owners could have applied for licensing.
He said that ‘a further extension of time will not be given’.
The Secretary of State said the government, through its Tourism Office, will put some pressure on town halls to urge the need to speed up the process of licensing
licensing properties. |
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