There are many tenants in the Algarve who will have to leave their long-term rented homes so that landlords can rent them out on a short term basis in the summer - this is a reality that has been taking hold in the Algarve for many years. What happens is that many landlords only rent for eight months on a long-term basis, and then take advantage of the summer to make good money and rent out short-term.

This is a very complicated problem, especially in tourist areas such as the Algarve and Lisbon which, as a consequence, no longer have proper affordable housing for long term renters. Very little has been done to tackle this issue. Recently, a court ruling was issued saying that local accommodation in apartments is forbidden, but this will have no bearing on this.

Ban on Local Accommodation

First of all, Portugal's short-term rental market and Alojamento Local (known as AL) have given a big boost to the local economy, not only because it has helped host many tourists who come to Portugal every year, but also because it has contributed to the renovation of old buildings, especially in Lisbon and Porto, as well as in the Algarve and Madeira. However, there is always the other side of the coin and this short-term rental market has started to be criticised as it allows for fewer and more expensive houses in the rental market for long term rentals.

This affects not only those looking for a property to rent, but also neighbours who complain due to damage to communal areas, noise and lack of security in their buildings. All in all, these complaints ended up being the subject of a latest court decision that prohibits these AL in apartments. In this regard, the Supreme Court of Justice (STJ) has banned local accommodation in apartments, but this will not change the scenario for any tenant as this decision only applies to properly registered AL and only owners of apartments in the same building can take their neighbour to court on these grounds.

In addition, several short-term rentals are not registered as local accommodation, even though they are one. "The law provides for the possibility of making these short-term contracts," said Maria João Ribeiro, legal adviser at DECO. However, many do not do so to avoid paying taxes.

In these cases, "there has to be a rental contract that has to be communicated to the tax authorities, and it has to comply with all the procedures of a rental contract, but as long as all the requirements are met, it's legal to do so," the legal adviser said.

Local accommodation or short-term contract?

From the client’s point of view, when booking a week in the Algarve, sometimes the difference between these may not be clear. DECO said that online booking platforms have to provide information about the local accommodation registration number. If they do not have this identification number, they are not an AL. "Consumers should check if there is a registration number. If it is a hidden AL without a registration number, consumers can always report it to local councils, as well as to ASAE and the tax authorities," she said.

"It is up to the consumer to find out because these establishments (AL) have to provide a physical complaint book and they must have access to the electronic complaint book on the online portal, so there are a number of requirements that must be met and we advise all consumers to get more information before entering into any kind of such contract, especially at the level of online platforms, because they must provide this information," she stressed.

How can tenants protect themselves?

In fact, many of these homes that are rented out for as little as eight months, have nothing to do with local accommodation as they are not registered as such. However, if the landlord has no contract with the tenants, those who have spent the eight months over the winter or those who have spent a week or two weeks on holiday are acting in the shadows of the law. In these cases, the best way for consumers to safeguard themselves is to ask for a contract, she suggested.

By law, although holiday rental contracts can be shorter, housing rental contracts must have a minimum duration of one year, renewable for a minimum of three years, which means that many of these housing contracts of only eight months are not meeting this requirement. However, many times these contracts are not even in writing. In these cases, tenants may have to prove the payment of the rentals if they decide to take them to court - so it is important that the rentals have been paid by bank transfer or have receipts.

If you want advice, please feel free to contact DECO. However, be aware that DECO only gives advice when the relationship is between a consumer and a business, never when the problem is between two individuals - "only when there's a profit-making entity involved", Maria João finished.