How to manage a local accommodation in Portugal

LOCAL ACCOMMODATION

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8 min read

by Francisca Ribeiro, Marketing & Communication

Published March 01, 2023

Long-term, the so-called "traditional renting" has become less popular among property owners in recent years as a result of the advantages of owning a local rental property. From small local private investors to large international institutions, many have chosen to invest in properties to put them on the market by renting them out to travellers temporarily.

Large cities like Lisbon and Porto experienced growth in local lodging, as have other tourist destinations, especially those along the lovely coastline. With the booming of short-term rental in the Portuguese market, in this three-part series, we will be covering just how you can successfully manage a property. In this first part, we will cover how to create an Alojamento Local in Portugal, from what exactly it is to the required documentation.

Local accommodation (AL) establishments are those that provide temporary accommodation services, namely to tourists, against remuneration, as long as they do not meet the requirements to be considered tourist resorts.

**How do you register a property as an Alojamento Local in Portugal?**

Photo by ePortugal on eportugal.gov.pt

Every short-term rental property, known as Alojamento Local in Portugal, must apply for a license and be registered before being rented out. The process is relatively simple:

Firstly, a prior communication should be made in the Balcão Único Eletrónico, addressed to the Mayor of the Municipality where the AL is located. It should include:

Utilisation permit or valid utilisation title for the property issued by the Municipal Council;
Identification of the holder of the AL, including the name of the owner or respective firm that exploits it and the tax identification number(s);
Address of the holder of the AL;
Name of the AL and its address;
Type of AL (apartment, villa,...);
Guest capacity (number of bedrooms, beds and guests);
Opening date;
Name, address and telephone number in case of emergency.

You must also attach a copy of the Cartão de Cidadão, the Caderneta Predial (it is like the apartment ID) of the property, and a declaration of the beginning - or alteration - of the activity at the Finance Department, with the respective CAE.

You should also have a signed Termo de Responsabilidade, ensuring that the property is legally qualified to serve the activity.

After the communication has been made, the municipal council has ten days to oppose the opening of the establishment. In the case of hostels, this period is 20 days. If at the end of the period the municipality does not object, a registration number is attributed.

With the registration number, you have the only valid title to be able to open your accommodation to the public and advertise it. If you have your accommodation registered on electronic booking platforms (such as Airbnb or Booking), you must disclose the registration number. Within 30 days of submitting the prior communication with the deadline, the municipal council inspects the accommodation to verify whether it meets the conditions required by law.

**What is considered an Alojamento Local?**

Photo by deborah cortelazzi on Unsplash

Alojamento Local is an umbrella term that encapsulates:

Villa: the local accommodation establishment whose unit of accommodation is constituted by an autonomous building of single-family character;
Apartment: the local accommodation establishment whose unit of accommodation is constituted by an autonomous fraction of a building or part of an urban building susceptible to independent use;
Accommodation establishment: the local accommodation establishment whose accommodation units consist of rooms integrated into an autonomous fraction of a building, in an urban building or a part of an urban building susceptible to independent use. They may use the designation hostel if they function primarily as a dormitory. To do so, the capacity of guests/users in the dormitory must be higher than the capacity of guests in rooms;
Rooms: the exploitation of local accommodation at the residence of the holder (corresponding to their tax domicile) when the accommodation unit is the room and the number of rooms does not exceed three.

These tourism businesses are subject to a legal regime known as the Regime Jurídico da Instalação, Exploração e Funcionamento dos Empreendimentos Turísticos. As a result, it applies to establishments that provide lodging in exchange for payment. For their operation, they must have an appropriate set of facilities, equipment, and complementary services.

The deadlines and authorisations required to open a local accommodation vary if the mode is a hostel. These establishments, for example, are the only ones that need prior permission from the condominium to operate.

What are the required documents?

To open the activity, you need to provide the following documents/information to the authorities:

The name, address, and Portuguese tax number (NIF) of the owner/person to carry out the activity;
Valid authorisation of use of the property;
Passport/ID and company documents;
Land registry document;
A signed declaration stating that your property is suitable as an Alojamento Local establishment;
Lease agreement, deeds, or other documents entitling you to rent your property;
Declaration of Tax Activity.

What are the requirements to be considered a local accommodation?

Photos by Marcus Loke on Unsplash

According to the regulation, a property must meet certain criteria to be classified as a local accommodation establishment.

The maximum capacity of local accommodation establishments is nine rooms and 30 users, except for the hostel (which has no capacity limit) and rooms (which can only be three in the owner's residence). In the case of flats and houses, the possibility of accommodating two more users in the room is added under the INE indicators. If there is enough space, two extra beds for children up to 12 years old can be installed;
The buildings must be linked to the public sewage system and water supply and have tap water available. The sanitary facilities are private or common to several rooms and dormitories and there must be at least one for every four bedrooms;
The operating entities of local accommodation establishments are required to communicate the accommodation of foreigners following the terms defined in Law No. 23/2007 of 4 July, which approves the legal regime of entry, stay, departure, and removal of foreign nationals. Local accommodation providers should also work with national authorities to collect and provide data for statistical purposes such as the number of users, overnight stays, and other metrics;
In the case of flats, each owner or local accommodation operation holder may operate more than nine units per building (if they do not exceed 75% of the number of existing fractions or independent parts of the building). To calculate the number of operating units, the number of flats registered in the name of the spouse, descendants and ascendants of the owner or operation holder, as well as those registered in the name of separate legal people, where there are common shareholders, are taken into account.

Some rules you must follow:

If changes are made, or in case of termination of operation, the owner has ten days to communicate what has happened. As with the initial registration of AL, the communication is done through the Balcão Único Eletrónico;
The legislation states that municipalities may define containment areas. In these areas, a limit is set on the number of local accommodation establishments. In addition, each owner is only allowed to operate a maximum of seven lodgings there. If the limit has been exceeded before 21 October 2018, the owner can keep these establishments, but cannot open new ones;
Anyone advertising an establishment that is not registered risks a fine of between 2,500€ and 4,000€ if they are a singular person. In cases of a legal person, the fine can be between 25,000€ and 40,000€;
The registration number is mandatory in the advertising, commercial documentation and merchandising of accommodation establishments. Electronic platforms that provide, advertise or market accommodation are also required to display this number;
Anyone registering a local accommodation establishment is obliged to take out an insurance policy covering fire risks, property damage and damage to property caused to guests and third parties. The lack of valid insurance may lead to the cancellation of the registration.

And that’s it! You already know all you need about how to become an AL owner. But what about the next steps? Do you know how to do your taxes as a property manager? Worry not and wait patiently for the next part in this series. At LUGGit, we don’t just want to help improve your guests' experience whilst travelling. We also want you to be the best property manager there is!