Many people who own a property in Portugal, may it be a villa or an apartment, let these to third parties. They do this either by their by using their own marketing, the use of a rental agent, estate agent or a combination of these.

Up until this point in time there was little or no control from the Authorities.

Besides the fact that rental income should always be declared to the Inland Revenue in Portugal, it has also always been necessary in the past to have the property inspected by the Ministry of Tourism (D.G.T.) from Lisbon prior to letting.

A few years ago the issuing of this Tourist licence was delegated to the local town council which is regulated in Artº 4º of the DR nº 34/97 van 17/9.

Recently the Ministry of Economic Affairs have started with inspections. Some estate-agents who are now allowed to intermediate with rentals have had inspections and have been found guilty of not complying with current legislation. Consequently property owners and agents have been fined heavily and will also be exposed to the tax authorities.

What is the case?

In Portugal after a house has been completed it will get an Inspection (Vistoria) carried out by the local town council (Camâra) and in case everything found correct the property will get a Habitation license (Licença de Habitação).This one is specifically destined for permanent living and basically does not allow the owners to let the property on a weekly basis.

In order to let legally a special license is needed and the property should be classified and licensed as a dwelling destined to receive and lodge tourists (moradia turística).

Unfortunately the procedure is not straight forward. It could be lengthy and possibly costly as it means that a licensed Architect should submit a special project to the town council and after being approved the property will be inspected again by the local town council, in certain cases in conjunction with the Ministry of Tourism from Lisbon. The requirements to let are in some cases different from permanent living.

An additional problem could occur when it comes to light that in the past certain parts of the house were not properly licensed. For example, that a pool was built without a project being submitted and approved.

All these changes should be now first approved and licensed in a legalisation project (processo de legalização), which should be done by your Architect.

In order to start the procedure to obtain a Tourist qualification the following documents should be submitted in 3-fold:

• Certified and stamped plans of your property obtained from your local town council showing what was approved in the past.
• Maps of the area your property is located in at scale 1:2.000 en 1:25.000
• Updated certificate from the Conservatory showing who the present owner is.
• List with exact measurement of all the rooms in the house.
• Furthermore you have to submit a fire safety project (in five-fold) which should be drawn up by a specialized Engineer.

In the application you also have to indicate:

• Which classification you require
• The maximum amount of people you intend to lodge.

Main reason of this legislation is to improve the image of the Algarve and to safeguard the security of people. Also the Hotel industry has instigated a more strict control as they feel there is allot of false competition.

One hopes of course that nothing will happen to your guests but in case of a calamity, the property owner, his legal representative in Portugal, the property Manager and the local rental agent or abroad will be held responsible!

Robert Snapper is a qualified estate agent in Lagos.

Tel. 282 768 821 or 917 566 931