Self catering accommodation and licensing requirements – Part two: The goose that lays the golden egg
By: DENNIS SWING-GREENE
International Fiscal Consultant for euroFINESCO
financial@portugalresident.com
IF SPECIFIC zoning licensing is not in fact required under current legislation for this type of activity, the obvious question is ‘Why not?’
Certainly there are legitimate concerns regarding quality and safety that need to be addressed. Other countries within the European Union and beyond regulate this form of tourist offering actively and sensibly and, at the same time, encourage owners to engage in the activity both as an investment and as a business.
Despite the fact that self catering villas and apartments have been around for many years in the Algarve, their presence has always been lumped in the category of “camas clandestinas” (illegal beds) and regional estimates for the amount range from 300,000 to over 700,000 beds. Regardless of where the exact numbers actually lie, these “grey” offerings far exceed those of the local hotel industry.
Hotel lobbyists, such as the members of the Algarve hotel and tourist resorts association, Associação dos Hotéis e Empreendimentos Turísticos do Algarve (AHETA), routinely complain vociferously about unfair competition. Yet there are two assumptions that are questionable behind these sweeping generalisations:
a) Self catering accommodations don’t pay their taxes and the hotels do;
b) All the tourists would come to their hotels if there were no such competition.
A far safer assumption might be that there is one type of tourist who seeks the hotel experience and quite another breed who prefers self catering accommodation.
If the latter option were not available in Portugal, it is doubtful that these holidaymakers would simply move to a hotel. Far more likely, visitors might go elsewhere in pursuit of what they want and they might not come to Portugal at all in most cases.
Foreign Property Investment
With the advent of low-cost air travel, Portugal is in the first wave of a veritable revolution in the tourist industry, changing the peak season from 12 weeks in the summer to 12 months all year round.
This blossoming phenomenon will benefit both the hotel sector as well as those investors who will find it more propitious to purchase Portuguese property, both for their own more frequent personal enjoyment as well as the increased opportunity to let out to holidaymakers to help cover overhead costs.
In fact, it is not difficult to recognise that the current real estate investment frenzy is the other side of the coin of the self catering accommodation phenomena. Already in 2004, according to Bank of Portugal statistics, foreign investment in Portuguese property matched receipts from general tourism. Since then, these buy-to-let investments have continued to skyrocket, adding billions to the local economy.
With the multiplier effect that this massive injection of wealth brings to Portugal – through strong investment of foreign capital, creation of jobs, new supporting services as well as additional tax revenues – it is hard to comprehend why there is so little understanding of this phenomena and, in particular, why there seems to be such an effort to kill the goose that lays the golden egg.
Like other countries around Europe wishing to encourage this double economic boom, from initial property investment followed by self-catering lets to holidaymakers, no one assumes that this should happen in an unregulated environment. As others have already found, there are simple, workable structures that can assure the quality of the offerings while guaranteeing the safety and security of the families and friends enjoying their holiday.
This implies new, workable legislation addressing the reality at hand, not applying the wrong statutes in the wrong situation to the wrong people.
Assuming that a common sense solution can be found suffice it to say that the big winner will be Portugal.
euroFINESCOs.a. – for consultations in the Algarve call 289 561 333; in Lisbon call 213 424 210; Mobile 969 102 813; by e-mail: info@eurofinesco.com
Do you have a view on this story? Email: editor@portugalresident.com
