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Owners returning to traditional rentals

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.

“AL” and potential Capital Gains Tax

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.

Gaia to cap “AL” offerings

The Vila Nova de Gaia Municipal Council has passed regulations to limit Local Lodging establishments and prevent the dislocation of long-term residents from historic neighbourhoods. The city centre and the entrance to the bridge D. Luís I are two of the target areas for the new restrictions. These measures follow on the heels of similar actions taken in Lisbon and other municipalities around the country.

Local Lodging registrations down in Oporto

The number of new Local Accommodation (“AL”)  registrations in the municipality of Oporto fell by 40% in the first quarter of 2019 as compared to the same period last year. The City does not manifest the need to implement “AL” containment measures as has happened in Lisbon, considering that tourism in Porto continues to grow and is in good health.

The Tax Authority tightens its siege on “AL” operators

Attentive to Local Lodging activities, the tax man is tightening its grip on owners who fail to report and pay their taxes. Online platforms may soon be required to share information on customers, according to the Jornal de Notícias. The aim of the Portuguese Revenue is to avoid fraud and tax evasion. To this end, the ministry is studying ways to force the holiday letting reservation platforms to report “AL” operator data to Finanças.

VN de Gaia to cap “AL” offerings

The Vila Nova de Gaia Municipal Council has passed regulations to limit Local Lodging establishments and prevent the dislocation of long-term residents from historic neighbourhoods. The city centre and the entrance to the bridge D. Luís I are two of the target areas for the new restrictions. These measures follow on the heels of similar actions taken in Lisbon and other municipalities around the country.

Local Lodging: 11 registration cancellations per day

In the past six months, almost 2,000 “AL” enrolments have been wound up. Many owners have stopped letting but failed to cancel their registrations due to capital gains tax liabilities. In the first quarter of 2019, new “AL” sign-ups fell nationally by 40% and by 60% in Lisbon. These numbers are likely to be understated. In total, the capital currently counts with 18,000 Local Lodging Establishments. Nationwide, there are approximately 83,000.  2020 could prove to be a year of mass exodus.

Two more “AL” restricted neighbourhoods in Lisbon

The Lisbon Municipal Council has prepared regulations which delimit the “’containment areas” to Local Lodging according to the law that came out last year. To the five neighborhoods that have been suspended since October 2018 from new holiday lets registrations – Bairro Alto, Madragoa, Castelo, Alfama and Mouraria – will be added two more: Graça and Colina de Santana.

“ASAE” has just one inspector for every 10,000 AL’s

There are more than 80,000 Local Lodging Establishments in Portugal and only eight inspectors from “ASAE” (Autoridade de Segurança Alimentar e Económica) to oversee them. Lack of safety and health conditions are the most common problems. But the capacity to intervene is “very limited”.

Mandatory Insurance for Local Lodging

Insurance providing civil liability coverage guaranteeing the property against damages caused by guests and third parties is required of all operators responsible for “AL” services. The minimum capital per claim is €75,000. Entities operating “AL” units that are part of a condominium must also have coverage guaranteeing property damage caused by fire in or from the “AL” unit. These insurances are mandatory for all Local Lodging establishments registered after 21 October 2018. Their absence is grounds for cancellation of “AL” registrations. Units registered before this date have up to two years to meet the requirements.

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