Alojamento Local vs illegal beds, the system is not working

Clandestine accommodation for tourists has been upsetting tourist boards and political parties for ages.

In 2002, Algarve tourist chief Paul Neves wrote “the tourist sector makes up 8% of the country’s GNP" and of the 500,000 Algarve beds he estimated that about 40% are illegal.

Consequently nearly half of the 81 million annual overnight stays in Portugal are illegal.

In 2006, tourist chief Helder Martins said that he was worried about the fact he had to deal with only 115,000 legal beds versus 200,000 parallel beds and in recent times the new Algarve tourism chief Desidério Silva said in an article that there are probably 5 million ‘illegal overnight stays’ each year in the  Algarve.

As a conclusion one can say that these illegal beds, or parallel beds, are really a pain for the following reasons:

•    the owners of illegal lettings fail to pay VAT, social security and IRS on their income

•  quality and safety are not always respected which creates a constant risk for renters and tourists (smoke detection, adequate insurance, etc)

•    the good name of the Portuguese tourist sector as a whole is put at risk

•   as there are 80,000 to 100,000 direct workers in the sector, plus at least an equal number of indirect workers, there is definitely a ‘human and a social problem’ involved as no social security or other legal protection exists

NEW LEGISLATION

We had to wait till March 7th, 2008 for Decree Law 39/2008 that for the first time tried to regulate this illicit tourism sub-sector.

The full responsibility was laid at the door of local Câmaras but as they clearly were not interested and not motivated, the whole operation collapsed.

At the end of 2010 (the deadline for the 2 year transitory period) only a couple of thousand properties in the whole of Portugal had been licensed.

As the sub-sector in the last few years grew exponentially, the politicians in their unlimited search for fresh and more tax income discovered this activity and on January 23rd, 2014 changed Decree Law 39/2008 into a new Decree Law, 15/2014.

GREED FOR MORE MONEY

With the conviction that all property owners would automatically and spontaneously take the necessary steps to license their properties, on August 29th, 2014 the government decided to change Decree Law 15/2014 and make a new and simple version under Decree Law 128/2014 which came into force on November 27th, 2014.

Practically all difficulties, obstacles and restrictions have been removed by the new legislation. For insiders it is clear the government wants to have the maximum possible number of registrations so that Finanças can collect the maximum possible tax income from this sub-sector.

CONSUMERS NEGLECTED

An essential part of tourism is the communication between national tourism bodies and the consumers/tourists.

Unfortunately good communication is not helped by Decree Law 128/2014 as the obligation for fixing an acrylic Alojamento Local, or AL, sign on each licensed property has been scrapped.

There now is no information available to tourists. This perpetuates the controversy between properly licensed and illegal beds.

Tourists are not helped by the new turismodeportugal.pt website, as in the Alojamento Local section only the telephone number and the e-mail address of the owner’s representatove is listed, not those of the real owner of the property.

NEW LAW

By simplifying the procedures, changes have "brought more people to the formalisation of the economy than the previous regime, which was more restrictive and demanding." The changes are in line with other reforms in the sector, Secretary of State for Tourism Mesquita Nunes noted, which aims to cut red tape to stimulate activity.

Under the new law, anyone who wants to rent out an apartment or house to tourists just has to inform the tax offcie and council without having to set up a company or do anything differently, with no restrictions on the number of units they may put on the market and no requirement to provide any specific services.

The key part of the new law is the registration with the tax office and Portugal Tourism. Nunes has spotted that local councils have been unwilling to do anything to help him, the recently changed regime was complex, unsuccessful and has failed - not that this is anything to do with him of course - and the latest version, which no doubt will be changed yet again, really involeves telling the tax office what you are up to, and maybe letting the council know too.

REGISTRATIONS TODAY

We had a look at the turismodeportugal.pt website and analysed the situation as of today January 24th, 2015, about 1 month after Decree Law 128/2014 came into force.

Nationally there are already 5,001 registrations, among them there are 1,562 villas, 3,009 apartments and 430 hostels.

This total represents on average 16 properties for each of Portugal’s council areas, or about 5% of the total target group.

Analysing a single council is even more interesting. Let’s take Lagoa where there are a total of 144 registrations, made up of 43 apartments and 101 villas.

This is about 3.5% of the target group. It is interesting to see that some owners were definitely alerted by the publication of the two new Decree Laws (or maybe the threat of high ASAE fines prompted some action) as of the 43 registered apartments there are 20 new registrations within the last 6 months.

Among the 101 villas there are 42 new registrations over the same period. So far so good as the system works.

CONCLUSION

The only question is;  what about the 95% of owners that have failed so far to register their properties?

Maybe the politicians could consider this suggestion:  99% of all tourist accommodation is promoted on the Internet and as the majority of these foreign website owners declare they “do not care about Portuguese legislations” maybe the government can amend the law so that property owners and website owners should fully and equally share responsibility so that they

•    are made aware of the changing Portuguese legislation and its consequences
•    and are open to fines from ASAE if they do not comply

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UPDATE 31 Jan 2015

The following changes have been made on the Turismo de Portugal /AL website:

1.       all "contacts" have been REMOVED this week - as you know it was stupid to mention the contacts, accountants, lawyers etc instead of the owners

2.       The number of licensed projects continues to grow slowly with about 100 units per day for the whole of Portugal. Today about 7% are licensed and in Lagoa already 5% are licensed.

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UPDATE 09 February 2015

The fact that every day there are an additional 100 licensed properties listed seems (only) to show the "maximum work capacity" of the people or the team that does the inputting at Turismodeportugal.pt - which is very low indeed.

What about the NATIONALITY of the owners and residents that register their property for licensing ?

Here is the list made for Lagoa (as an example of one of the 308  Concelhos)

-          The "good ones" are: English 80%, Germans 7%, Portugese 7%

-          The "others" like Belgians + Greek + Indians + Italians +  are 4%

-          And the" bad ones" are the Dutch with under 2 %

That's interesting to know as it might be possible that "the information or ad hoc  messages were not good or they did not reach the target group what proofs that the government did a poor or a bad "marketing job".

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UPDATE 14 February 2015

*       On the national site the AL registrations have climbed to 7,370 units, some 9.2% of total

in Lagoa things are going very slowly as in one week there were only 10 properties licenced 6,65% of total

*         After having deleted all contact information from the initial 5,000 licensed properties from the official AL website, turismodeportugal
started adding the telephone and e-mail details for each of the newly  licensed  properties. This makes the website useless for tourists and professionals as it is incomplete

*         Throughout our contacts in the field we have learned of some "unbelievable matters":

-          lots of owners have difficult in persuading their website owner to add the new AL license number to their advertisement and as such they put themselves at risk for ASAE fines

-          from several foreign website owners we heard (or read in their e-mails) that they are not willing to collaborate as they say "the Portugese have to solve their own problems."

As we already suggested the government has to amend urgently the 218/2014 legislation by stating that "from now on website owners - both nationals and foreigns - will be responsible for the full application of the law.

-          it is not normal that so few owners that already have obtained a license before the new legislation (27 november 2014) to get a new AL license number. Many of them declared in the last few weeks that either they "never heard about a change in the law" or they were convinced "the changing would be done automatically without their personal intervention".

UPDATE 19 FEBRUARY

As the Alojamento Local website on turismodeportugal.pt has been running for 12 weeks and has only about 10% of the total number of  properties to be licensed, it’s time to make an assessment of the list.

*         first point: where are the other 90% of properties that still need to be registered and licensed?
EVORA has only 3 licensed properties,  Sintra only 37, Silves only 144? Why so few?

*         As there are a huge number of apartments licensed we went through the lists and noticed that
every apartment in a tourist block has been licensed, however many apartments there are in the building.   

*         What does the Decreto-Lei 128/2014 say about that? The law is explicit as it says:

-          Art 11- 1 a capacidade maxima dos establecimentos de alojamento local é de nove quartos (9) e 30 utentos;

-          Art 11-2  cada proprietário ou titular de exploração de alojamento local, so pode explorar, por edifício, o máximo de nove (9) estabelecimentos de alojamento local na modalidade de apartamento;

                -      Art 11-3 para o calculo de exploração referido no numero anterior, consideram-se os estabelecimentos  de alojamento local na modalidade de apartamento registrados em nome de cônjuge, descendentes e ascendentes do proprietario ou do titular de exploração e bem assim os registrados em nome de pessoas colectivas distinas em que haja sócios comuns.

*         And what does “the list” teach us today?

-          each apartment separately has its own license number. As such the 9-apartment rule is not respected and has been overruled.

-          In the same time the rule that there can be maximum 9 apartments per building or per owner/manager/operator licensed under the Alojamento Local is abolished. Some examples: Jardim da Rocha has 51 separtely licensed apartments in one circumscription; Village Marine in Olhão is the champion with about 170 apartments separately licensed; Mantamar in VRSA has 18 apartments licensed, Odelur in Aljezur has 10, etc.etc. In all this examples the “owner” is the same person or company.

-          Of course we also find large numbers of apartments located under the same address but where each of the apartments is owned by a different owner.  And that is of course complying with the law.

-          The cases where each apartment in the same building is registered under another name (family members or associates) is of course not complying with the law but also exists !

*         Conclusion: business as usual….

UPDATE

Some of them told us "we have a license number (old one) and we are sticking with it!"

Conclusion: it's confusing - business as usual.

 

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