There are now 34,000 local accommodation properties registered in Portugal, according to the Secretary of State for Tourism, Ana Mendes Godinho who claims the effort to supervise unregistered properties is "under way."
The complex and highly disliked Alojamento Local scheme has been in operation since 2008 with amendments in 2014, but over 70% of properties rented out to tourists remain unregistered, despite successive governments claiming the ‘big purge’ on illegal lettings is starting.
Trade sources say there are 120,000 private properties that should be registered for short-term lettings, but are not.
In the autumn of 2015, Ana Mendes Godinho inherited the task of making the Alojamento Scheme work in the face of massive opposition from property owners who find it easier to ignore the legislation than to comply.
Godinho agreed that the Alojamento Local scheme soon proved to be flawed after its launch in Faro in April, 2015 by the then Secretary of State for Tourism, Adolfo Mesquita Nunes.
The only change made to date has been to raise the taxation rate on rental income, hardly encouraging unregistered property owners to comply.
Ana Mendes Godinho acknowledged that "there have been many difficulties" experienced by ASAE in monitoring illegally let, “in part due to the difficulty in cross-referencing data.”
The main problem with ASAE has been its reluctance to instruct inspectors to switch their focus to rental properties and away from the food and retail sectors.
However, Godinho says ASAE has "intensified" its activities in this sector from the second half of the year, with 500 properties already inspected. Of these, "15% were not registered," said the secretary of state, perhaps unwilling to recognise that at this rate of inspection it would take 120 years to cover the lettings market.
At the close of the seminar: 'Alojamento Local em Portugal – Qual o fenómeno?' hosted by the Hotel Association of Portugal and the Nova School of Business and Economics at the Universidade Nova de Lisboa - a call was made for cooperation between the government and accommodation platforms such as Airbnb and Homeaway.
The most successful legislation works on the ‘carrot and stick’ formula. With the Alojamento Local laws, there is no carrot and the stick has yet to be wielded.
With less than 30% of property owners registered after eight years, the scheme has failed and the Secretary of State knows it, yet she has not made the revisions necessary to make it work.
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More Alojamento Local information is available at Nalle, the local lodgings association:
Ed's '5 minute solution' -
These thoughts in fact took 15 minutes to write down in draft form - please add your comments:
1. Property owners register their accommodation for free on a new Turismo do Portugal Lettings website, tasked with becoming the largest lettings site in the country where tourists can book and pay for their holiday breaks.
This site is similar to AirB&B - but free to list - and heavily advertised and promoted on the web as the huge majority of holidaymakers now book their flights and their holiday accommodation online.
Holidaymakers are issued with a checklist password so later they can fill in a feedback form online with the chance to win a holiday or similar.
The site is self-regulating as customer feedback weeds out poor accommodation, similar to TripAdvisor. Seriously poor feedback means no further bookings.
As people are paying for their holidays online, a percentage is deducted when they pay. This covers income tax at, say 10% or 15%. Finanças are therefore not involved at any stage and simply receive money each month from the Turismo de Portugal website. The commission from the booking total is sufficient to run the rental scheme and cover income tax.
Properties need to be insured against accidents. When registering the property, owners tick a box for 'insured?'. If they are not, a link through to an online insurer will enable insurance to be purchased - with a percentage reverting as annual commission.
Renters fill in their own passport number(s) when booking, this can be filtered off to the SEF which can store the data.
2. Scrap the CGT treatment of rental space if within a primary residence. The current rules deter tens of thousands of people from registering as GCT is applicable on sale.
3. Scrap the necessity for owners to register as self-employed. The letting of property should be an exempt category. This will encourage tens of thousands of owners.
