Huge rise in Algarve 'local lettings' - most of them illegal

Portuguese holidaymakers again have fallen in love with the Algarve, but prefer renting apartments and villas rather than staying in hotels.

Albufeira is the most popular municipality, followed by Loulé, Portimão, Tavira and Vila Real de Santo António but those booking their holidays are unaware or unconcerned that the accommodation selected is neither registered nor compliant with the laws of the land.

National and international bookings made through the dominant HomeAway website have grown an impressive 39.5% in a year with most of the accommodation on offer flouting the complicated Alojamento Local rules, thus remaining outside the law.

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 occupancy rate for private holiday rentals in Algarve was around 85% mark in July with over 90% of the accommodation listed on HomeAway already was booked for August with an average stay of eight days. This is a huge and largely untaxed business sector which the government has failed to control despite high profile efforts.

According to the HomeAway Portugal study, the Algarve leads the list of regions for reservation requests (71%), followed in order by the Centre, the Alentejo, Lisbon and the North (each with about 7%).

Regarding the nationalities of tourists choosing the Algarve as a holiday destination, the main group is Portuguese (50%), followed by French (20%), British (18%) and Spanish (8%).

Sofia Dias, responsible for HomeAway in Portugal, commented, "low cost air companies operating from Faro with weekly scheduled flights with affordable prices, facilitate the arrival of tourists to the country. Portugal is winning foreign tourists due to its hospitality, climate, food and low cost."

More local accommodation has been registered under the new laws launched in November 2014, later explained to a largely baffled Faro audience by the Secretary of State for Tourism Adolfo Mesquita Nunes, but nowhere near enough to make the effort worthwhile.

Turismo de Portugal’s list of registered properties allegedly is receiving 75 new applicants each day, a figure seized on by the Secretary of State to show how well his scheme is working, but of the estimated 140,000 units for let in the Algarve region, only 6% were register by the end of June 2015 leaving 94% operating illegally and their owners probably paying no tax on the income received.

Despite the new legislation that aimed to simplify matters, there are still many owners who continue to rent their properties illegally which contributes to unfair competition for those who have registered and of course for the hotel sector.

Adolfo Mesquita Nunes has decided that "the local lettings market is a challenge, not a problem" but it is a problem that need the cooperation of the market, not complication and empty threats and the conclusion after 8 months is that the scheme either needs heavy-handed and effective policing, or a new scheme be devised that looks sensibly at the barriers to entry and works with the sector rather than threatening heavy fines and failing to prosecute miscreants.

Sofia Dias of Portugal HomeAway says that "it is very important to respect the new local accommodation laws" and explains that since the start of the new regulations, Home Away has “communicated proactively” with its advertisers emphasising the need to register their activity.

"It is in our interest that all our advertisers act in accordance with the law and with full transparency for customers and the tax and tourist authorities," said Dias whose employer stops short of making registration a condition for advertisers before their HomeAway listing is accepted.

There has been a rise in those opting for registration at the Faro launch of the new law, 300 delegates heard from Eurofinesco’s tax expert Dennis Swing Greene about the launch of the National Association of Local Lodging Establishments (NALLE), dedicated to helping those who let their properties and wish to do so legally.

It is fairly astounding that this huge market sector is unregulated and untaxed. The fault is that of the government as if the huge majority flout a law, then it has been shown to be unworkable and simply is not fit for its intended purpose.

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