A MEETING was due to be hosted by the Direcção-Geral de Turismo (DGT), the general directorate for tourism, in Lisbon on Wednesday of this week (March 15), the day after this issue of The Resident went to press, to debate the application of Decree Law 55/2002, which regulates the licensing of properties for tourism purposes, reports The Resident’s Caroline Cunha.
This legislation has hit the headlines in recent months (see January 20 and March 3 editions of The Resident) due to the outrage among the tourism sector at the fines being handed down by government watchdog, Inspecção Geral das Actividades Económicas (IGAE), the general inspectorate for economic activities, for non compliance. Much anger and frustration exists among villa owners and rental operators as, in practice, it has been found that it is virtually impossible to obtain the licence required due to the inability shown by local councils to process the related paperwork.
Many representatives from local councils and trade bodies throughout Portugal were expected to attend the meeting, although the majority were expected to be from the Algarve. Macário Correia, president of the Junta Metropolitana do Algarve, Hélder Martins, president of Região de Turismo do Algarve (Algarve Tourism Board), Elidérico Viegas, president of the Associação de Hotéis e Empreendimentos Turísticos (Algarve hotel and resorts association) and José Mendes Bota, president of the Parliamentary Sub-commission for Tourism and MP for the Faro District, were all due to be present, among other key figures.
José Mendes Bota states that he implored the DGT to hold this week’s meeting in order to provide explanations. The MP for the Algarve is demanding that the government immediately suspend the inspections and the handing down of fines, and asks that the deadline to comply with the law be extended until the end of 2007.
Is the Algarve being singled out?
In Mendes Bota’s opinion, the Secretary of State for Tourism, Bernardo Trindade, “is ill informed,” adding that the câmaras are not prepared to issue the necessary licences. “The state has already inspected and fined several villa rental agencies in Albufeira, Almancil and Monte Gordo, but, in the rest of the country, we haven’t heard of anything with regard to this matter,” said Bota, implying that the Algarve is being singled out.
In a report featured in Correio da Manhã newspaper this week, it stated that the only câmara in the Algarve that is equipped to issue the licence is Faro, a situation that clearly makes nonsense of the legislation currently in place.
This is a burning issue, particularly in the Algarve, with many spectators saying that the fining spree is purely a money making exercise on the part of the government, which is desperately trying to balance its gaping state deficit.
According to a reliable source, owner of a private villa in Lagoa that is rented out to holidaymakers, the current legislation is totally unrealistic. “What we hope to achieve with this meeting is a more realistic approach,” he said. “I see myself as a victim of this legislation.
“While trying to find a solution for myself, I met with other owners to discuss the problem. We are asking for a total amnesty for the 35,000 projects involved. This makes sense because it is physically impossible for the Portuguese administration to issue all the licences and solve the problem within the next one or two years,” he declared.
The source explained to The Resident that a group of property owners got together to compile a detailed report, which puts the situation in black and white. “What we need is a quick and easy solution and, therefore, we made some proposals and submitted a report, which, I am certain, is forming the basis for this meeting. I have also been in regular contact with Hélder Martins and Elidérico Viegas,” he said.
The group call themselves STARS (Small Tourist Accommodation Renting Sector), which is made up of owners of apartments, villas, townhouses and private rooms. This self-formed association calculated that, as a result of the unworkable legislation currently in place, 80,000 people could become unemployed, 50,000 of them Portuguese.
With so many fines being handed out, villa rental agencies are on the brink of going out of business and villa owners are being forced to sell up or take their properties off the rental market. This has a direct result on the employment of cleaning staff, gardeners, pool cleaning technicians and many other workers.
“When the government read the statistics in our report, faces turned white,” the source said. “I think they had no idea of the repercussions their attempt to enforce this legislation would have, and only now they are beginning to see sense.”
The source also stated that the investment required in order to comply with the current legislation (alterations required to be made to the property, new architect drawings, and so on) costs 10 times more than what one can earn in a year. “It is ridiculous. Currently, someone renting a single property or part of their home has to have the same licence as a Sheraton or Hilton Hotel,” he said.
In the report, STARS propose that there should be different legislation for hotels and large accommodation villages, and for smaller owners.
The source criticises the Algarve’s câmaras for their role in the situation. “Everyday, this legislation is distorted by the câmaras. They all have different guidelines in place and some, for example Lagoa, even send you back to the DGT saying they have no licensing system in place. This is completely unlawful,” the source said.
“One of our key proposals is that, in the interim period, while the legislation is being re-thought, self legislation should be introduced for property owners, to be administered through lawyers and financial advisors. Property owners can then submit declarations on a regular basis for the authorities to check over as they wish,” the source said. “If this system is approved, we can have a solution within a couple of weeks.”
Whether an adequate solution will be found to suit all parties remains to be seen, but The Resident will be bringing you a report on the outcome of this week’s meeting at the DGT in next week’s edition.
The Algarve News
A number of interest groups and representatives of the tourism sector have returned empty-handed from a meeting organised by the Direcção-Geral do Turismo (DGT) in Lisbon on Wednesday afternoon.
The meeting was called after regional authorities in the Algarve were flooded with inquiries from concerned home owners who had received notification that they would be fined for non-compliance with legislation regulating the holiday letting of private homes.
While none of these notifications have resulted in the payment of fines, regional tourism authorities and interest groups are concerned at the lack of information over law decrees 167 of 1997 and 55 of 2002.
The meeting in Lisbon, intended to remove doubts over the legislation, proved to be little more than DGT representatives reading out the law as it stands, concluding that it has to be upheld, showing little sympathy over problems the Algarve tourism sector could and is experiencing.
Earlier on Wednesday, the chairman of the Almancil Business Association (AEA), Aníbal Moreno, presented the region's case to a parliamentary commission, consisting of members of all political parties.
According to Mr Moreno, MPs from the different parties showed a much greater understanding of the problem, and trusts that a solution could still be manufactured for the problem.
During this meeting, MPs were called upon to present their peers in parliament with a law decree altering certain stipulations of the existing legislation in order to make its application less ambiguous and reduce any potential damage to tourism in the Algarve.
City Halls, who have the licensing power of holiday homes, have, to date, not issued a single licence explains the AEA chief, adding that it is virtually impossible to do so.
In order for the owners of, for example, a studio apartment that is let out in the summer to be in compliance with legislation, "eight different elements have to be verified by six different entities for the apartment to be legal", explains Mr Moreno.
A situation which the AEA chairman terms "ridiculous" and "impossible".
However, he did stress that licensing of holiday homes has positives (once home owners are able to do so), explaining that it will prove that a holiday rental home is duly registered and give tourists additional peace-of mind knowing that their accommodation has complied with stringent legislation.
In the meantime, The Portugal News has been speaking to letting agencies and real estate agents elsewhere in the European Union, and it appears that this licensing law problem is not unique to Portugal.
In comments to The Portugal News, two separate estate agencies in Britain explained that home owners have been given until April 6 to licence their properties for tourism purposes or face fines of £20,000.