Stricter laws on local rentals

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New laws passed this week by the leftist parties in Parliament has seen local councils and home owners’ associations or condominiums handed extensive powers in regulating and restricting the number apartments that can qualify for local lodging licences (Alojamento Local - AL). The decision has already been criticised by associations representing landlords, saying the move is a step in the wrong direction and will have a negative impact on tourism.

According to the legislation approved by Parliament on Wednesday, with the favourable votes of the ruling Socialists, Communists and the Left Bloc, town halls will now be able to create “areas of containment”. This measure will allow councils to limit the number of AL licences issued in a neighbourhood. Town Halls and parish councils will also be able stipulate a maximum percentage of units which can hold an AL licence in specific areas.

In areas of containment identified by councils, a single owner will not be allowed to hold more than seven AL licences. This criteria will only apply to new licences issued once the law comes into effect, which is set to occur within 60 days of its publication in the Government Gazette.

There is also a stipulation that “hostels” cannot exist in residential buildings without the consent of the condominium. Home owners can also stop neighbours from letting out their properties to holiday makers. The new law also states that whenever more than half of home owners are against an apartment(s) being adapted for holiday lettings, citing issues affecting the daily lives of others, they may vote against approval, followed by informing the local mayor of their decision.

Any new AL licence requests will be filed with the local mayor, and that will also need to be accompanied by an authorisation from the condominium in the case of hostels.

Town Halls can however oppose the application. Should it be favourable, the town hall will have to conduct an inspection within 30 days to verify that the unit is conformity with existing requirements.

Condominiums can also demand an additional payment of home owners’ fees of up to 30 percent as a result of the increased use of common areas by holidaymakers.

Fines for non-compliance with laws and regulations have also been increased to 4,000 euros for private individuals and 40,000 euros for companies.

Hotel and Restaurant Association (AHRESP) and the Portugal Local Lodging Association (ALEP) have meanwhile expressed their “shock” at this legislative rewrite.

They argue that Town Halls can now create the so-called areas of containment without justifying their decision, saying it opens the decision-making process to subjective opinions of each and every council.

The associations add that the new laws are in contrast to other reforms across the EU, which, as opposed to Portugal, have embraced the changing face of residential tourism and international trends.

Earlier this year,the national association of estate agents in Portugal (APEMIP) warned that measures aiming to increase restrictions on local lodging threaten the well-being of the property market.

APEMIP issued a statement following Friday’s debate, saying “the very existence of local lodging could be at risk”. This follows plans to make it compulsory for those letting out properties to seek the approval of condominiums or homeowners’ associations prior to applying for a local lodging licence.

APEMIP said at the time that the approval of local lodging regulations some years ago has had a hugely positive effect on the residential real estate market and served to boost the national market as a whole.

“Local lodging has brought investment, encouraged renovations and brought new dynamism to city centres, while also saving the building and restaurant industries, while also creating jobs for people who would otherwise have had to leave the country”, APEMIP President, Luís Lima, argued.

He added that problems identified by the parliamentary proposals aiming to alter local lodging laws existed long before AL even came into force, adding that this sector generated 120 million euros in taxes in 2017 alone.

He concluded by saying that “leaving the decision as to whether or not a person may rent out their property in the hands of fellow homeowners is letting them become prisoners to envious and bad neighbours.”

Almost 60,000 properties are currently registered across the country, with the majority located in Lisbon and Porto, followed closely by Albufeira.

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