quinta, 26 maio 2022

The future of short-term rentals in Portugal

VolverIn a recent decision, the Supreme Court of Justice (STJ) (Case no. 24471/16.4T8PRT.P1.S2-A-RUJ), standardized jurisprudence for short-term rentals (AL) installed in apartments, determined that the exploration of an apartment for short-term rentals is not allowed if the apartment registered use is destined to habitation in the respective title of the horizontal property.

The recent evolution of short-term rentals / Alojamento Local

This has long been discussed on account of the importance, both from a legal, economic and social point of view, that short-term rentals have gained over the years. As a result of this, successive legislative alterations have been implemented and altered:

• The Legal Regime of the Operation of short-term rentals Establishments, since the entry into force of Law n. 62/2018, of 22 August, now predicts in article 9, n. 2, the possibility of opposition to the exercise of the short-term rentals activity, by means of a resolution of the condominium owners corresponding to more than half of the permillage of the building, which should be submitted to the Municipality for a decision to cancel the registration: "In case the activity of local accommodation is exercised in an apartment or part of an urban building susceptible of independent use, the condominium assembly, by decision of more than half of the permillage of the building, in a deliberation, due to the repeated and proven practice of acts that disturb the normal use of the building, as well as acts that cause nuisance and affect the rest of the condominium, may oppose the exercise of the local accommodation activity in that fraction, informing, for this purpose, the President of the Municipality where the building is located."

• On the other hand, the Legal Regime of the short-term rentals establishments already prohibited the installation and operation of "hostels" in buildings constituted under a horizontal property regime in buildings where housing coexists, if there was no authorization from the condominium owners for that purpose (cf. article 4, no. 4).

Regarding the question of law that led to the Supreme Court rule, the legality of the short-term rental in a unit that is used in a building subject to the horizontal property has long been questioned due to the disturbance that such allocation may cause to the other unit owners (e.g. the noise at late hours caused by the frequent entrances and exits of guests or their social gatherings in the unit).

Due to this, in 2018 the Court of Appeal ruled on this issue determining that the exercise of the activity of short-term rentals in an apartment intended for housing violated the purpose given to it.

However, the Supreme Court of Justice (STJ), in 2017, believed that in the lease of a furnished property to tourists "the fraction is intended for such use and it was not similar to the exercise of a commercial activity", so the content of the constitutive title of the horizontal property, which states that a fraction is intended for dwelling purposes, is respected if that property is used subject for local accommodation purposes".

As a result, and given the fact that there could be contradictory decisions from higher courts regarding the same legal question - the so-called conflicts of jurisprudence, which are court rules that decide in opposing directions on an identical question - an appeal for the uniformization of jurisprudence was issued in order to put an end to the divergence of opposing decisions, thereby guaranteeing the principle of equality and stability and harmony in judicial decisions.

The Uniform Court Ruling

In its Uniform Court Ruling, the STJ argues that there must be a conjugation of civil law rules with administrative rules, insofar as the constitutive title of the horizontal property may restrict the scope of the purpose of the property about what is stated in the project or authorization for use (if it is not incompatible with or distorts the essential content of property rights).

The STJ argues that the legal regime on local accommodation does not contemplate any rule protecting the rights of the condominium owners in relation to the installation of accommodation establishments in a unit intended for dwelling purposes by another condominium owner, or any other rule which may derogate from the protection of these rights conferred by the horizontal property regime set out in the Civil Code. Thus, the allocation of an apartment fraction intended as a dwelling may or may not imply the exercise of commercial activity, but this does not remove its nature of allocation other than as a dwelling in the constitutive title of the horizontal property.

The Court further states that the reasons which led the legislature to opt for an autonomous type of accommodation are specific and do not lead to the fact that the accommodation can be identified as a short-term lease, and that the benefits provided by the owner of the accommodation, although they require the necessary conditions of habitability, do not constitute a housing benefit by nature with a degree of permanence and stability. Thus, the apartment use would not be a simple dwelling of the apartment equivalent to the dwelling which the users not covered by the Commercial Property (even if they may stay overnight and rest there) make of it, from the point of view of the purpose of the thing and the respective socio-economic environment.

Even if one considers the subsequent amendment to the short-term rental regime (by Law no. 62/2018, of 22 August) allowing the condominium's assembly to adopt a resolution opposing the exercise of the short-term rentals activity in apartments, this is an a posteriori reaction measure, distinct from generalized permission to exercise the short-term rentals in a "housing permit".

Finally, the rule also states that the short-term rental is not taxed as a dwelling.

For all these reasons, the STJ concludes in the Uniform Judgment of Jurisprudence that in the horizontal property regime, the indication in the constitutive title, that a certain apartment is intended for dwelling purposes, should be interpreted in the sense that local accommodation is not permitted therein.

The Future of Local Lodging

The Uniform Jurisprudence Ruling is binding only on the parties to the case in which it was issued.

However, the Ruling will have a double effect: (1) guidance for the courts whenever a similar question is raised, foreseeably influencing the decisions rendered in the scope of a legal question similar to the one which was the object of uniformity, to ensure the harmony of the judicial system and avoid contradictory decisions by the courts, and (2) the increase of litigation, since, even though this decision does not determine the illegality of the short-term rental which are in this situation, any condominium owner may request a decision of illegality and the consequent annulment of the registration of the establishment before the judicial courts.

It should also be noted that the case law standardized by the STJ Judgement on the short-term rental will not be applicable:

- to apartments used for commerce or services

- to buildings that have several autonomous fractions belonging to a single owner

Finally, there is at least one bill presented in Parliament by the political party Iniciativa Liberal which, after the decision of the STJ, intends to clarify the legal regime of the exploration of short-term rental establishments so that there is no change, i.e. "that people can continue to have their businesses, that tourism can continue to prosper, that small businesses and families that depend on this business for their living can continue as before" according to the member of parliament Carlos Guimarães Pinto.

The European Commission is also expected to present a legislative initiative on short-term rentals at the beginning of June. According to the Commission, the initiative will aim at developing responsible, fair, and reliable growth in short-term rentals as part of a balanced tourism ecosystem and will seek to ensure a level playing field for all accommodation service providers, responding to the multiple requests from stakeholders for EU-level action in this area that entails solutions for cities, landlords, providers, and professional platforms, while benefiting small and medium-sized enterprises, which are primarily disadvantaged by the wide variety of regulations and requirements adopted at a local level.

The Real Estate Department at Belzuz Abogados is currently monitoring the consequences of the Supreme Court's decision and the work related to the development of new legislation on the subject, being fully available to provide clarification or advice on this matter.

Departamento de Direito Imobiliário | Portugal

 

Belzuz Abogados SLP

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