Even the president of the Association of Accommodation in Portugal (ALEP) now agrees that the Local Lettings law introduced a year ago is adding so many new and unexpected costs and obligations, that many property owners have returned to operating illegally.
Eduardo Miranda said today at a meeting in Faro that the alleged success of new Alojamento Local laws can be put in question as the state has created new burdens for those in the holiday lettings business, citing 'commercial water rates' as case in point.
"Of all the obstacles that could hinder the legalisation of properties in terms of cost, the application of commercial water rates is the big one; this can put off a substantial portion of those letting their accommodation," said the president of ALEP.
An information session in Faro today marked the end of the first year of the new Alojamento Local law that an estimated 90% of those involved in the business have chosen not to comply with.
The president of the Algarve Tourism Board, Desidério Silva tried to put a positive spin on the law, saying that he 'had information' that the authorities are receiving an increasing number of registrations under the new law, both from those new to the business and from those deciding to ‘go legal’.
Miranda said that "there have been many Alojamento Local registration cancellations. There are lots of new people coming in to the market, but after a year, when they see the cost of compliance, many people rethink."
The 'commercial water rates' obligation in the Alojamento Local law obliges any property not served by mains water to have expensive water treatment equipment installed and dosed with chlorine, anathema to many rural tourism businesses whose marketing emphasis is on the fresh air and natural water of an unspoiled rural Algarve.
Bookings for short-term rental made through the HomeAway website have grown an impressive 39.5% in a year with most of the accommodation on offer operating outside of Alojamento Local compliance.
Despite fines that could reach €3,700 in the case of an individual and €35,000 for a business, the majority of property owners continue to rent out their houses, apartments and rooms quite illegally.
The ‘local lettings’ legislation was explained in April, 2015 by the Secretary of State for Tourism, Adolfo Mesquita Nunes on a visit to Faro.
The audience remained unconvinced, as the complexity of the new scheme and the involvement of multiple government departments seemed designed to make life harder, not easier.
There was a follow-up seminar in May, 2015 opened by Rui Almeida of Moneris, who said there "appeared to be a number of issues regarding the fiscal framework provided in this new law, including issues about various taxes, including corporation tax, income tax, VAT and social security obligations which for many owners makes letting out their property an uneconomic proposition."
With such a low registration rate after the first year of operation, the law needs radical change to encourage compliance.
Adolfo Mesquita Nunes no longer is in charge of this sector and his over-complicated, badly thought out Alojamento Local law deserves to be consigned to the scrapheap and a new one designed with input from those engaged in the industry, not by men in suits.
For compliance information, property owners are encouraged to contact :
NALLE http://nalle.pt/ and afpop http://www.afpop.com/uk/index.php
