Are you renting your property to vacationers?
By PEDRO MIGUEL
IN THE previous article, I wrote about the New Urban Rentals Law. It was dedicated to those renting property f or permanent living. This article is dedicated to those renting to vacationers, a very common practice in the Algarve and one that is normally in the mind of those who buy an apartment or villa in the region. These rentals are known as “parallel beds” by the bigger and more formal tourism operators (i.e. hotels, guesthouses).
The law that regulates this type of rentals has changed considerably and for some time now, but not many people know exactly how and to what extent. Some rental agencies and property owners have already suffered severe fines due to lack of knowledge. A few of those agencies even had to close doors, not being able to pay the hefty fines.
Be aware: the intention is not to scare you off from putting your property on the market, but to let you know how to go about it the right way. It will save you a lot of hassle (and money) in the future.
1997 – the turning point
In 1997, there was a change in the law that regulated this type of rentals. Regulations already existed before 1997, but, in practice, they were not followed mainly because of the lack of control means at the Tourism Office. After 1997, what previously was named as “Private Housing” – and that already had to be registered at the Tourism Office – was renamed to “Touristic Developments” and its licensing transferred from the Tourism Office to the City Hall, or câmara.
The apartments and villas, which were, previous to 1997, listed and registered with the Tourism Office as Private Housing, were automatically transferred to Touristic Developments. New properties have to apply from scratch.
Touristic Developments –
what are they?
Touristic Developments are units of independent buildings (i.e. apartments) or autonomous buildings (i.e. villas/townhouses), furnished and equipped, which are mainly used to provide, in exchange of payment, housing and other complementary services to tourists. But, before renting out your apartment or villa, you need to request a Touristic Licence from the câmara. Your property will need to have the minimum requirements for such operation (which can involve some changes in gas and fire security for older properties), as stated by the surveyor who will visit your property.
Your property will also need to have:
• A responsible, identified person on hand.
• An identification sign.
• Information to customers.
• A representation office (i.e. travel agency or estate agent).
• Cleaning service.
As it is the câmara that will issue you the needed Touristic Licence (they will link up with the Tourism Office for that), it is them that will inspect and request changes, if any, to be able to classify your property as touristic and, therefore, available for rentals.
Real Estate Agents – can they rent your property?
The answer to this question is not an easy one. Some say yes, some say no. The Tourism Office says no and, obviously, all the Real Estate Associations say yes. By law, any Touristic Development, either hotel or private apartment, needs to be registered with the Tourism Office; therefore, it is under its jurisdiction.
The only companies allowed to promote and rent touristic properties are the ones registered by the Tourism Office and which carry a special licence for it. Real Estate companies have no such licence and, by law, they can only perform two activities: real estate mediation (which includes long-term, permanent habitation, rentals) and property management. The whole discussion then revolves around what exactly “property management” means.
My opinion is that, since it is the Tourim Office that establishes and hands out the fines, estate agents are better off staying away from short-term rentals; and definitely staying away from renting properties that do not have a Touristic Licence!
Regarding property owners, the advice is the same; the possible profit is just not worth the risk: apply for a Touristic Licence for your apartment or villa from the câmara and play it safe. The requisites for such a licence are not hard to meet, normally involving just a few hundreds euros of changes, and the benefits are all there: the Algarve has 300 hours of sunshine a year, is Europe’s top golf destination, its beaches are some of the most beautiful and its violent crime rates are still low. And you can profit from all that, as long as you play by the rules ….
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