The new Alojamento Local rules came into effect on the 7th of October 2023 one day after their publication. But what do the new rules on Local Lodging in Portugal entail? We clarify everything in this article, shedding light on the changes and impacts resulting from the new regulations.

The main changes in the Alojamento Local sector in Portugal concern the suspension of the granting of new licences, the increase of powers for condominiums, the revaluation of AL licences, more decision-making powers for town halls and the introduction of a new extraordinary contribution fee. Familiarise yourself with all the changes and consult with your Western partner - Casas do Barlavento - about your current situation.

New Alojamento Local Rules in Portugal 2023:

• Suspension of new issuances of Local Lodging licences

This set of measures suspends the issuance of new Local Accommodation licences. The suspension includes apartments, rooms, or hostels integrated into an autonomous fraction of a property. Coastal areas across the country and the entire Algarve are included in this suspension, with only the Autonomous Regions, 165 municipalities classified as low-density areas, and 73 low-density parishes exempted, despite belonging to cities with high population density.

In summary, this restriction will only be applied to municipalities along the country's coastal areas and the Algarve with higher population density.

• Revision of Alojamento Local licences

Local Accommodation licences will be reassessed in 2030 and can be renewed every five years. There is an exception to this new measure: those who purchased a property for Alojamento Local using a bank loan will have the licence automatically renewed in 2030, and this renewal will follow the contracted time in the bank loan. This exception applies only to those who applied for a bank loan until February 16, 2023.

If an AL property is unused, and the owners do not want to lose its licence, they have until December 7 to submit the income statement.

Alojamento Local licences are personal and non-transferable, at the risk of expiration. This does not apply to succession situations.

• New Fee for Alojamento Local

The new extraordinary fee is CEAL (Extraordinary Contribution on Alojamento Local). It's a 15% fee, and the revenue will go to the Instituto da Habitação e da Reabilitação Urbana (IHRU). CEAL is only applied to apartments or hostels integrated into a horizontal property and cannot be deducted from the taxable profit of Corporate Income Tax (IRC). This fee varies depending on the property's area, Alojamento Local income, the evolution of rents, and the urban pressure where the property is located.

This extraordinary fee cannot be applied to accommodations in municipalities and parishes with low population density.

• Condominiums gain more decision-making power

The condominium assembly can now oppose the existence of Local Lodgings in a specific horizontal property, increasingly gaining decision-making power on these matters. If two-thirds of the building's permillage (66.6%) object, the assembly must reject the activity in that autonomous fraction.

The assembly can only abstain if the constitutive title specifies that the autonomous fraction is intended for use as a Local Lodging, or if there is already a previous decision.

• Role of Municipalities in the Management of Local Lodging

The role of Municipalities will be to ensure a balance between housing, Alojamento Local, commerce, student housing, and other activities. Each Municipality should draft its own Municipal Housing Charter, outlining the guidelines for housing balance, as mentioned in the Housing Basic Law (Lei de Bases da Habitação).

• Increase in IMI for properties under Local Lodging

The rise in the IMI on Properties will only be applied to properties with an active Local Lodging business and will not be transferable to all autonomous fractions of the horizontal property. The IMI rate could reach 1%, instead of the usual 0.30% or 0.45%.

• Proof of Alojamento Local Activity

We've already touched on this matter at the beginning of this article; however, it's crucial to be aware that you must provide evidence of your Local Lodging (AL) activity by December 7, 2023. To do so, you should submit your 2022 IRS statement or, if you started the activity in early 2023, the declaration from the commencement of the business.

Complete the registration on the RNAL platform or at the City Hall, where the property is located. In the event of failure to provide proof of Local Lodging activity, the licence will be revoked. This procedure has been in effect since October 7 and concludes on December 7. Considering the limited time to submit the evidence, Casas do Barlavento is willing to assist Local Lodging property owners in the submission of this document.

Get in touch with us and clear up any doubts about the new rules for Alojamento Local. Count on our support to continue your business in the Algarve's western region.