Alojamento Local: The New Rules

On July 17th, as a result of the increasing number of privately owned short-term rental properties in Portugal, especially in the areas of Lisbon and Porto and the consequent impact on the quality of lifes of residents, the government has taken action and voted on alterations to the existing Alojamento Local legislation, which will become effective 60 days after promulgation.

The most important alterations are:

1. Containment Areas

In order to avoid an excessive number of AL accommodation and therefore and insufficient number of residential properties, Containment Areas (Áreas de Contenção) may be established by the council in order to limit AL properties in certain parishes or parts of parishes. This limitation must be reviewed within 2 years.

The approval of the quotas, which will be at the discretion of each council, as they are not conditioned by law, must be made by “regulation and with a reasoned decision” within one year after the approval of the resolution by the municipal assembly. In Containment Areas, each AL property owner is allowed to rent out up to 7 properties.

In Containment Areas the AL license is not transferable, no matter if it was obtained by an individual or a company which means that the license expires once the Operator of the Property (Títular da Exploração) is replaced or if more than 50% of the shares of a company holding the license are transferred to a new shareholder. In case of succession, the registration will remain valid.

2. Properties in Condominiums

The short term rental activity of a property located in a condominium may be cancelled if owners representing more than 50% of the built area (permilagem) vote in favour of such cancellation and only if the reasons presented are based on “repeated and proven acts that disturb the normal use of the building, cause discomfort and affect the rest of the condominium owners”. The final decision will be taken by the council after hearing all parties involved. Once a cancellation has been approved it remains valid for 6 months.

Condominium assemblies may also approve the payment of an additional contribution from AL property owners based on the expenses resulting from the increased use of common parts, with a limit of 30% of the annual condominium fee. However, this extra fee can only be charged by the condominium if stipulated in the internal regulation, which needs to be voted on and approved by a majority of owners at a condominium meeting.

Properties in condominiums must have multi-risk insurance to cover damage caused to guests or third parties as well as damage caused by the increased use of the common parts of the building, since the Operator of the Property is liable for these kinds of damage. A missing or inadequate insurance may lead to a withdrawal of the AL license.

3. Rooms and Hostels

Rooms in a property shared with the owner now fall under the AL category as long as it is the owner’s fiscal domicile. In this case, up to 3 room per property are allowed.

Despite an initial proposal of separating hostels from hospitality establishments (estabelecimentos de hospedagem) these will continue to be classified as AL properties. For commercial purposes, they may be designated Bed & Breakfast (B&B) or Guest Houses.

A permit from the condominium assembly is required for the running of a hostel in a condominium.

4. Close-down of Properties

Councils can close down AL properties if incorrect information is detected on the registration documents. Furthermore, councils and the ASAE may impose a “temporary interdiction of the running of the AL property, in whole or in part”, whenever “failure to comply with applicable legal provisions may affect the safety of users and public health, without diminishing competences of other authorities”.

5. Cessation of the Activity

The Operator of the Property must notify the cessation of the activity within 10 days after it occurred to the Balcão Único Eletrónico and to any online rental platform (portals) they have used to advertise the accommodation.

6. Information Book

AL properties will be obliged to have an “Information Book” containing details about the functioning of the accommodation, namely waste collection and separation, the operation of household appliances and the indication of precautionary measures which aim to prevent acts that could disturb neighbours. This book, which must be made available in Portuguese, English and at least 2 further languages, must also contain the phone number of the person responsible for the running of the accommodation and, if applicable, the condominium rules and practices.

7. AL Signs

The mounting of identification signs on the outside of AL properties, which used to be optional for villas and apartments, will be mandatory for all types of accommodation. On hostels, it must be mounted on the outside, next to the main entrance.

8. Increased Fines

Parliament approved the increase of fines for non-registered short term rental accommodation. For individuals, the fine starts at 2,500€ and may go up to 4,000€ (current limit is 3,740.98€) and for companies, from 25,000€ to 40,000€ (current limit is 35,000€).

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