Algarve Property Management Law and Taxation

New Laws and Taxes now apply to the Commercial Letting of property in Portugal

Algarve Property Management Law and Taxation

Thinking of letting your property commercially in the Algarve or Portugal? You'll need to have a commercial rental license (known as Alojamento Local) to do so...

For many years, property owners and property management companies in Portugal have been able to let properties commercially without a great deal of interference from the State. Now, however, both owners and agents need to apply for a government approved commercial letting license, known in Portuguese as "Alojamento Local".

The government has moved to ensure that the quality of real estate let to tenants and holiday makers in Portugal is of an adequate level in terms of facilities and safety, with fines for non-licensed properties ranging between two and a half thousand and twenty five thousand Euros.

A property owner or property manager who wishes to let a villa or apartment commercially is obliged by law to apply for the Alojamento Local license before commencing commercial activity. The early drafts of this new legislation were unclear and, as such, unenforceable. As a result, government lawyers simplified the law and the final version of Alojamento Local is already in force with fines levied on owners and agents who fail to comply.

Prior to a property in Portugal being deemed suitable for rental purposes there are now several criteria that need to be addressed. The real estate must be in good general condition, clean and with no obvious problems such as damp or dry rot. There must be one bathroom to every three bedrooms and all bathrooms must be furnished with at least one toilet, one sink and a bath or shower. Additionally, all rental properties must provide fresh, running hot and cold water as well as mains sewage or a septic tank. They must also be well furnished, offer adequate ventilation and have either blinds or drapes to stop light entering at the tenant's discretion.

Security of the rental property must also meet prescribed standards with locking external doors a pre-requisite. Inspections by government appointed electricians and gas engineers must be undertaken.

Once the property has passed these inspections, the property owner or their property management company will receive a certificate confirming that the building is suitable for renting with respect to these utilities. An inspection by the local Fire Department will also be needed to certify that the building meets the required standards for fire safety.

The new laws affecting property rentals in Portugal also include other articles that must be addressed before a property can receive a commercial rental license. For example, a complaints book is mandatory under the new directives and a laundry service must be put in place to provide clean linen at least once a week. The rental property must clearly display contact numbers and information pertaining to emergency services. It will need to provide enough fire extinguishers and blankets for the building's size and all appliances, electrical and otherwise, must come with the proper instructions.

If there are more than fifty beds in a rental property in Portugal, it must have a dedicated alarm and telephone line in case of fire and an additional fire safety project will need to be provided during the application process.

Assuming that a property meets the aforementioned conditions and that all documents and certificates are in order, the application process may begin. Applications are submitted with all relevant documentation to the respective local council department in charge of commercial letting. Relevant documents include the property owner's identification, the habitation license, approvals issued by the inspecting electrical, gas and fire officials, plans of the building itself and tax paperwork.

Applying for a commercial rental license for a property in Portugal can be a trying experience, especially if you do not speak Portuguese. Many property owners therefore choose to leave the process in its entirety to a professional property management company that will be able to attain a license without fuss and in the shortest amount of time possible.

Article witten by David Norton Company: Norton & Mackenzie Lda.  "With two decades of experience in Portugal and Algarve property management, Norton & Mackenzie can help with every phase of the commercial rentals license application."

For a free pdf document about "Alojamento Local" contact:  now.

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