Since NALLE started to offer its services in February 2015, the Local Lodging industry has undergone profound changes. A small business sector which started out with 15.000 units, has grown to be a real competition to the hotel industry in Portugal.
In 2015, there was a real lack of access to information in regards to the rules and regulations. Nowadays, the information on how to open and run such a business can be easily found online. ALEP, our Portuguese counterpart, is doing a good job in terms of information and workshops to enable owners to run their business successfully and in compliance with the law.
NALLE can now be considered to be an additional information service, adding on to many others, and we feel that we are not essential to the market. Also, we have not been able to attract enough members over the years to cover our running costs.
We have therefore decided that we are going to provide the service until the end of 2019, and to discontinue our work from then on.
As compared to hotels, “AL” already has twice the capacity to receive tourists in Lisbon. In the nation’s capital which has 500,000 inhabitants, Local Lodging can accommodate 102,000 holidaymakers. In March 2019, there were 18,000 “AL” units in the municipality of Lisbon, an increase of around 80% from 2008, maintaining the trend of accelerated growth of previous years. Of the 18,000 accommodations, 90% are short-term holiday let apartments (notably commercialised through Airbnb), with 9% being hostels, while hotels can accommodate less than 50,000 travellers. Since 2001, the data reveals that Lisbon has been losing inhabitants while tourist demand has been steadily increasing. In 2011, the city received 2.9 million guests. By 2017, demand almost doubled to 5.2 million (+ 83%), which represents a nearly quarter of the total holidaymaker demand received nationwide.
Question: I have a local lodging unit that I have only been able to let during the high season. Now I have a potential tenant who wishes to rent the apartment for this eight-month period, from October to May. Can I do this by concluding a contract for the period and then move forward with weekly and biweekly lets in the summer?
Yes, such a hybrid solution is possible. You will need to make a rental contract, defining the duration of the agreement as well as delimit other conditions. In essence, this arrangement is compatible with your proposed summer “AL” activity. However, you will not be able to deduct expenses as you would with a conventional long-term lease.
In the first six months of 2019, new lease agreements were 9.2% more expensive as compared to the same period last year. The price per square metre went from €4.80 to €5.00 in the first semester. At the same time, fewer families were able to find long-term rental accommodation. Data published by the National Institute of Statistics (INE) reveal that the number of new contracts fell by 10.5%.
Lack of space in the capital coupled with the stabilization of rents in the real estate market has prompted promoters to choose to reconvert apartments into leased offices.
Since the Local Lodging boom began in 2008, small property owners are returning in increasing numbers to traditional long-term rentals. Numerous factors are pushing this trend. “AL” offerings have reached glut conditions in some central urban areas. Excessive offerings and limited demand push down prices. Over the last ten years, Local Lodging enrolments in Lisbon have soared from less than 3,000 to almost 50,000. In addition, Local Lodging can prove to be demanding work. Outsourcing tasks such as cleaning, marketing and maintenance can eat into profits. In contrast, long-term rentals require only a minimum involvement on the part of landlords.
Inspections and audits of aquatic facilities in tourist resorts continue to be lacking more than a year after the latest legislation was passed. In question is Law 61/2017 of August 01 which exempted resorts from contracting lifeguards for their pools. According to this legislation, the presence of a lifeguard became optional, provided that permanent supervision was in place, secured by a duly identified technician with first aid training. According to the National Tourist Registry, there are currently 4,426 resorts registered in Portugal. “AL” units outnumber these registrations by almost 20 fold. Despite the disparity, the rules for tourist developments continue not to apply to Local Lodging Accommodations.
3.4 million tourists who visited Portugal in 2018 were housed in Airbnb accommodations. The US company reports that these visits had an impact on the Portuguese national economy in the order of €2 billion, or the equivalent of 1% of GDP. On average, each of these visitors who booked via Airbnb spent €115 per day. Portugal is among the countries where Airbnb has the most significant economic impact, ranking 10th after the USA ($33,800,000), France ($10,800,000) and Spain ($6,900,000).
The holiday let reservation platform has added “Airbnb Luxe” to its options. The new category makes available luxury accommodations and associated premium services, such as a route planner, chefs and masseurs. The Airbnb Luxe promises offerings to guests that are “the most extraordinary houses in the world”.
The withdrawal of a property from a Local Lodging tourist activity was already potentially subject to capital gains assessment under previous legislation. However, the way the law was drafted left room for doubt as to the exact point that the tax would be due. In the 2018 State Budget, this doubt was clarified, making it unambiguous that there is deferred payment of capital gains tax when the property is further assigned on an ongoing basis to income from category F (long-term rental). Without this abeyance, a Capital Gain may be attained in the year of cessation of the business assignment. Regardless, reporting is done in your annual “IRS” return.