In the neighbourhoods most pressured by tourism, it will be possible to open new Local Lodging Establishments (“AL”). However, according to the rules that the capital’s municipal council wants to see approved, new registrations will be dependent on a special authorisation. “AL” licences will be valid for five years, after which they will have to be renewed. Currently, seven historical areas face restrictions.
The new regulatory restrictions implemented since October of last year have failed to slow demand for central Lisbon properties. While new Local Lodging applications dropped by 60%, foreign investors continue to seek out and buy property in historical districts as real estate sales soared by 38% over the period. While the “AL” sector is still significant, there are clearly other factors driving the market as well.
In the past six months, almost 2,000 “AL” enrolments have been wound up. Many owners have stopped letting but failed to cancel their registrations due to capital gains tax liabilities. In the first quarter of 2019, new “AL” sign-ups fell nationally by 40% and by 60% in Lisbon. These numbers are likely to be understated. In total, the capital currently counts with 18,000 Local Lodging Establishments. Nationwide, there are approximately 83,000. 2020 could prove to be a year of mass exodus.
The Lisbon Municipal Council has prepared regulations which delimit the “’containment areas” to Local Lodging according to the law that came out last year. To the five neighborhoods that have been suspended since October 2018 from new holiday lets registrations – Bairro Alto, Madragoa, Castelo, Alfama and Mouraria – will be added two more: Graça and Colina de Santana.
The Vila Nova de Gaia Municipal Council has passed regulations to limit Local Lodging establishments and prevent the dislocation of long-term residents from historic neighbourhoods. The city centre and the entrance to the bridge D. Luís I are two of the target areas for the new restrictions. These measures follow on the heels of similar actions taken in Lisbon and other municipalities around the country.
While the European Commission (EC) defends the end of “Golden Visas”, Portugal contends that the programme will go on. In recent years, the scheme has served as a gateway for millions of euros into the national real estate market in exchange for permanent residency visas for high net worth foreign investors. In light of the controversy, the government has announced plans to alter legislation to improve transparency as called for by the European Parliament.
The Algarve and the Lisbon Metropolitan Area were among the regions with the most significant increase in employment in the EU in 2017. Eurostat recently released data confirming that 253 EU regions, representing 90% of the total, registered a rise. In 26 other districts, employment decreased and in two others, remained unchanged.
The distraction of holidaymakers and the lack of security at some “AL” flats have led to a rise in thefts at Local Lodging establishments, mainly those located in the “Baixa” district of downtown Lisbon. In response, law enforcement (“PSP”) has started a prevention program with the owners called “Blue Lock”.
The water regulator advocates that establishments used for local housing should pay for water as “non-household” users. The increase is already in place in several councils. However, there are other centres, such as Lisbon, where the municipality has reimbursed the extra charge.