Newsletter: Portimão's convent, Vila Real's land, Loulé's buildings and Albufeira's local hero

Dear reader

A week of news and views from the Algarve...

The local lettings legislation (Alojamento Local) continues to cause problems as the Lisbon Court of Appeal decided that apartment owners can be prohibited from letting their properties as doing so is a commercial activity.

If at a condominium meeting owners decide to ban short-term lettings to tourists, anyone doing so will be breaking the law.

At last that’s settled then, unless you live in Oporto where an identical legal case was heard and the court decided the apartment owners can let to tourists as and when the opportunity arises, whatever the neighbours say.

Whether each region in Portugal is now going to decide what its resident apartment owners may or may not do when it comes to lettings remains to be seen but with these two major cities at odds over the rules, it may be some time before there is any clarity.

In the meantime, the property market for apartments will be hit. Who now would buy an apartment which they want to rent out to tourists, when later they could be prevented from doing so?

I came up with a ‘five minute fix’ for the failed Alojamento Local legislation - a solution which is far too simple and practical ever to see the light of day.

Portugal remains dogged by many multi-agency and often illogical paper-based administrative systems which lead to over-manning and continued inefficiency.

The Secretary of State for Tourism said at the start of 2016 that she would look at the bureaucracy and make changes - all that has happened so far is a rise in the short-term rental income tax rate.

A reader, one with experience in tourist lettings, sent in his own suggestion for administering the Alojamento Local system.

Anything would be better than the current legislation which has received a big ‘thumbs down’ from those it is meant to be helping.

Portimão’s mayor, Isilda Gomes, has lost patience with the owners of the Convento de São Francisco which lies in ruins. The convent has a chequered history but finally became a Property of Public Interest in 1993. This meant little and the buildings have remained privately owned and privately neglected.

Gomes has had enough of being jerked about by the current owners and has said that she is going to get ‘personally involved.’

The previous, free-spending mayor of Portimão failed to buy the convent, even he baulked at the stiff price demanded, so now it’s up to Gomes to use whatever means at her mayoral disposal to secure and rescue this impressive property.

The Bank of Portugal governor, Carlos Costa, will soon be told which of the remaining two suitors for Novo Banco he should choose. It is the 'Chinese vs the Americans' in the final contest but whichever company ends up buying Novo Banco, the financial loss at last will be clear for all to see.

When engineering the Banco Espírito Santo ‘resolution’, (aka ‘bailout’), Costa said the taxpayer might even make a profit when the newly created Novo Banco was sold off.

In reality, the loss from this botched ‘rescue’ will be between €3 billion and €4 billion, to be covered by the country's banks and taxpayers.

Another bank in trouble, State-owned Caixa Geral de Depósitos, will cost the taxpayer further billions in write-offs and bad debt provisions.

The appalling financial state of this bank was known to the previous finance minister, Maria Luís Albuquerque, and the then prime minister, Pedro Passos Coelho, but they conspired to say nothing and to downplay the dire state the bank was in, especially during the 2015 election year.

Albuquerque expressed ‘surprise’ at the Court of Auditors' report on Caixa Geral published last week that concluded, rather politely, that there had been a ‘weakness in control’ displayed by her ministry.

The only surprise is that the opposition fell for her assurances that all was well at Caixa Geral: similar assurances were given by the Bank of Portugal governor shortly before BES went bust after a €3.6 billion hole was found in its accounts so how Caixa Geral was allowed to continue to lose billions of taxpayers' cash remains to be seen.

As it is, the taxpayer has yet another major bank to bail out because those in charge were not paying attention or deliberately withheld the truth.

Vítor Aleixo, the mayor of Loulé, has launched a raft of tax incentives for owners of property within the historic city centre, now defined as an Urban Rehabilitation Area. This is to encourage the renovation of private property and the purchase of properties for renovation.

This scheme will attract private investment to the historic centre. The mayor gets old buildings refurbished in the centre of his city and owners receive tax and fee exemption for their efforts.

This model should be adopted by all of the Algarve’s councils and a standard list of architectural ‘dos and dont’s’ developed to guide those embarking on renovation projects.

There is a six hectare plot alongside the Vila Real de Santo António waterfront. The derelict land is controlled by Docapesca, the government agency that runs the country’s fish auctions and controls significant parcels of land dotted along Portugal's shoreline.

A British company, Mount Pleasant Investments Ltd, has signed up to build a hotel on the site, but which company is it as there seem to be two Mount Pleasant Investments Ltd listed: one in the Bahamas and one at an accommodation address at the rather less exotic Farringdon Road in London.

I am sure the council has done its due diligence and has required that a large deposit is paid by the developer before this €5.6 million scheme is started.

The twin advantages of building projects on Docapesca land is that there invariably is a sea or river view and that many of the normal planning rules and regulations can be by-passed due to Docapesca's particular legal status.

Blevins Franks advises that rules are changing and those thinking they are domiciled in Portugal might well surprise their heirs post mortem when the UK’s HM Revenue & Customs decides otherwise and taxes their estate at 40% for amounts above the normal tax-free allowance.

Those expatriates owning property in the UK through a company structure need to be aware of the impending April 2017 rule changes as such arrangements will no longer work.

There are significant changes to Trust laws too, this article is worth a read - and a follow-up chat if you think you may be affected.

A group of wealthy Portuguese tax evaders had no intention of following the rules when they engaged in an obvious fiddle via Banco Espírito Santo which took a nice 5% commission on transactions designed to rob the taxman.

Banco Espírito Santo, MillenniumBCP, Banco Português de Negócios and Finibanco were all raided and offenders' names were gathered.

Faced with prosecution, many of the country’s rich decided to pay the tax, including António Mota of the company Mota-Engil who shelled out €6 million rather than face prosecution.

There were 700 people caught in ‘Operation Hurricane’ but only 42 are now going to court, presumably these are the ones who could not afford to pay up, or simply think they have done nothing wrong.

A case that the Portuguese government wishes would go away keeps on cropping up. The Iraqi twins who attacked Rúben Cavaco in Ponte de Sor this August, necessitating an induced coma and reconstructive surgery, remain covered by diplomatic immunity and thus may avoid prosecution.

The public, the press and presumably Rúben Cavaco want the two 17-year-olds to be prosecuted for their crime.

The Iraqis and Portugal’s Ministry of Foreign Affairs have hoped this case would go away but the Public Prosecutor is insistent that the boys are formally interviewed and that their diplomatic immunity is lifted so that the investigation can be completed and any charges brought.

The Iraqis should act now and lift the diplomatic immunity. This is an international scheme under the Vienna Convention of 1961 and was not set up for the sons of diplomats to beat up locals and get away with it.

Article 29 of the Convention reads: “Diplomats must not be liable to any form of arrest or detention. They are immune from civil or criminal prosecution, though the sending country may waive this right.”

The Vienna Convention is explicit that "without prejudice to their privileges and immunities, it is the duty of all persons enjoying such privileges and immunities to respect the laws and regulations of the receiving State."

The twins, Heider e Rhida Ali, both have said they would help all they can with the investigation. Perhaps, if they asked for their immunity to be lifted, a Portuguese court would take this into account when deciding on their punishment.

Another person in a sickening attack, this time on a defenceless woman in Albufeira, was chased and captured by a local hero.

A homeless 67-year-old woman was brutally raped and beaten in the early hours in a bank entrance in Albufeira. The rapist, Ibrahim Salem, had run off but bar worker Cody Searle found the woman, realised what had happened and ran after her attacker, tackling him and detaining him until police arrived.

Searle gets my vote as 'hero of the week' for his actions and our sympathies go to the homeless woman, well known to Albufeira locals and being cared for in Faro hosital.

Salem arrived in Portugal in October this year and was part of a group of 15 refugees from a camp in Italy. They are being hosted by the non-profit Antonio Silva Leal Foundation which offers protection to 'children, young people, adults and seniors at risk of social disintegration and exclusion.'

Questions need to be asked...not least of the above foundation as to why the victim was not being cared for - she seems to fit its admission criteria.

Financier, José Maria Ricciardi left Haitong Bank last Friday, causing swirls of rumour around the question, ‘why so suddenly?’

Ricciardi, Ricardo Salgado’s cousin, has worked at the Chinese bank since December 2014 after Banco Espírito Santo de Investimento, where he was the big cheese, was bought by Haitong.

One of the Espírito Santo ‘clan’, Ricciardi has been advising on the sale of the Comporta estate in a clear case of conflict of interests. He also has been advising China’s Minsheng on the Novo Banco sale where it has reached the final selection.

If the Comporta estate is sold at a knock-down price to enable the Espírito Santo family to regain control, the scam Ricciardi currently is trying to pull, then his next job could be running this ‘jewel in the crown’ development.

If Minsheng wins the Novo Banco sale contest, will Ricciardi end up running what, in effect, is the old family bank?

Some in the know point to a long-running investigation by the Chinese overseers at Haitong into Ricciardi’s probity. Hopefully, soon we will uncover the real reason for his sudden departure.

An epic journey in the finest tradition of daft yet wonderful activities started on Friday and will end on Sunday night as eight intrepid cyclists complete the EN2 route from Chaves to Faro - all 738 potholed kilometres of it (that’s 459 miles in old money.)

These are not match-fit professional cyclists, simply a small group of people from Lisbon and Faro who use their bicycles every day and reckon that the EN2 challenge is just for the fun of it, a bit of fresh air, to see the countryside...

Organiser of the impressive-sounding Vadiagem Voadora, Diogo Tavares, said that this is the "most genuine" way to get to know Portugal.

Such wonderful madness, we need more of this!


News you may have missed in the week - remember, there is news posted every day on
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Con artists who pursued tourists arrested in Spain

Con artists who pursued tourists arrested in Spain

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Germany sets up fund for migrant repatriation

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Attorney General charges 21 people for drug trafficking in Faro

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