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New 'Alojamento Local' law explained PLUS insurance cover update

alThe Alojamento Local law, which regulates the short-term rental of properties (holiday lets) has been altered, writes Azul Properties.

Making sense of Alojamento local changes

In October 2018 the new law (62/2018) relating to Alojamento Local (temporary tourist accommodation) came into force.

Most of the new requirements are (fairly) straightforward. However, one of the alterations to the law is that not all requirements are applicable to all types of property.

Firstly, these are the general rules that do apply to all types of property rented under the Alojamento Local scheme:

Councils may create contention zones, within which they can control (and restrict) the number of properties within the AL scheme. To prevent a “gold rush” effect whereby property owners quickly apply for AL whilst the councils are creating and agreeing the contention zones, councils may immediately suspend the issue of new licences.

Licences granted to properties within contention zones are not transmittable, i.e. when a property is sold the licence will not be transferred to the new owners.

Councils now have powers to close down AL properties (if they are unregistered, incorrectly registered or operating over capacity) and apply fines for non-compliance. This is an important change, as control has been all but non-existent up to now.

An information book is to be created to give clear information to all guests. This must include:

-Rules in relation to rubbish collection and recycling
-Instructions for all appliances
-Rules relating to noise and explaining how to avoid disturbing neighbours
-Telephone number of the person responsible for the AL
-Information in Portuguese and English, plus two other languages
-The rules and regulations of the condominium (when the property forms part of a condominium)

An identifying plaque must be placed at the entrance to the property, showing that the property is an AL property. There is an approved format for the plaque.

Condominiums
The following rules apply to properties in condominiums (apartments generally, but any building with multiple separate accommodation units that have shared common areas):

If the majority of the owners within a condominium oppose the use of a property as an AL, then the condominium can prohibit this.

Owners of units rented out under the AL scheme must take out a multi-risk insurance policy, which covers any possible damage to the shared parts of the property by tenants. N.B. at the time of writing there is no insurance policy available in Portugal that provides this type of cover. We are currently waiting for clarification regarding this.

The condominium management can opt to increase condominium charges for AL properties, and these can be increased up to 30%.

Adaptation period
Existing AL properties have two years from the date the law entered in force to comply with the new requirements.

All new requests for AL are subject to the new requirements immediately.

Practicalities
For existing owners of AL properties, we advise that they adapt to the new requirements as soon as possible, as these are not particularly onerous.

The provision of the identifying plaque and guest handbook ensure a better experience for guests, and promote confidence in officially licensed properties.

It will be interesting to see how condominiums react to the new powers they have. Condominium general meetings are held in January normally, and we wait with bated breath to see if any condominium managers actually raise the condominium charges for AL properties. We doubt that many condominiums will veto AL completely, but time will tell.

Comment
The primary problem with the AL scheme is the lack of adherence by owners of rental properties. This reticence to comply with the law is partially caused by the excess of administration required, not least of which is the registration of all guests at SEF, itself time consuming and serving little purpose.

Sadly, the new law has done nothing to simplify the process of registration (which, in fact, is not too bad) and ongoing management. We think this is a missed opportunity.

The new law does bring new powers for the local councils to fiscalise (inspect) and control AL properties. The councils do not have sufficient resources to police their day to day activities, so it is highly unlikely that they will be able to effectively regulate AL. Councils are obliged to follow up all complaints, so whilst it may be a slow process, at least someone with local knowledge will visit contentious properties.

The creation of contention zones, to prevent the over saturation of AL properties in areas that are already under pressure, is undoubtedly a sensible idea.

Increased condominium charges and giving condominium owners powers to restrict AL is a little bit NIMBY (Not In My Back Yard), but we need to see how this is put into practice.

Overall, the new law has added some sound principles, increased control over AL properties that cause problems for their neighbours but has not done anything to make AL registration more appealing to owners.

 

UPDATE

 

 

News - Updated Al Insurance Cover Now Available.

Updated AL insurance cover now available.

Following on from our recent article (https://www.azul-properties.com/113366/algarve-property-news/new-alojamento-local-law/) regarding the changes in the Alojamento Local law, we have received details of an updated insurance policy.

This policy complies with the requirements to insure against damage caused by guests to common areas.

Those operating AL properties within condominiums are obliged to take out this insurance. In the case of new applications for AL, then the insurance must be taken out when the activity starts.

Existing AL properties are required to have this insurance in place within the transition period (until October 2020) but it is common sense to put this in place now.

Allianz are offering a fixed price policy of €65,40, for €75.000 of cover. If you would like details of this, please email Miguel Raminhos miguel.raminhos@conseg.pt

Azul Properties

https://www.azul-properties.com

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