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Some recent clarity on the new AL measures

Posted by Chritl Lee on 04/05/2023

It has been a confusing few weeks for many, since the Prime minister declared that there would be a suspension on the issuance of new AL Licenses and we have all been waiting in anticipation for the public release of the new measures- still to be approved by the President of the Republic

  • New measures only applicable to apartments and autonomous fractions:

In his speech, the Prime Minister stressed that the public debate – which ended on March 24 – resulted in some changes to what was initially proposed in terms of AL Licenses. The measures adapted in the meantime now come to “guarantee a balance between resolving the local housing crisis, especially in areas of greater pressure and the continuity of Local Accommodation”. The prime minister also clarified that “This restriction only applies to apartments and autonomous fractions. Wherever there are houses, there are no restrictions of any kind and it will continue to be possible to grant new licenses for the AL”

“For now, it is better to suspend the issuance of new Local Accommodation licenses, because each house that is going to AL is one less house for families to live in – and this is not an abstract reality”, said António Costa.  Issuance of new Local Accommodation licenses, under the new measures, will be suspended until December 31, 2030

António Costa also made it very clear that the suspension of new AL licenses until 2030 will not be applied (if the legislation obtains the green light by the President of the Republic)to autonomous regions, to the 165 municipalities classified as low-density, nor to the 73 low-density parishes of another 20 municipalities. That is, the suspension of new AL licenses until 2030 “will apply to a set of well-defined municipalities, essentially concentrated on the coast and in the Algarve region”, which is where the AL pressure on housing is greatest.

AL registrations issued up to the date of entry into force of the new rules will expire on December 31, 2030, being renewable for five years from then on, as provided for in the Government’s bill. “All the licenses that are currently in force will remain in force, if the owners so wish, until 2030”, guarantees António Costa. Those who want to keep their properties in AL until 2030 will be subject to the appreciation of the municipalities in question. “In 2030, the municipalities will decide whether or not to renew the licenses”, he stressed. Thereafter, renewals of AL licenses will be carried out every 5 years.

  • Exemption for families who have purchased their property on credit:

However, families who made an investment in the purchase of a house allocated to the AL using housing credit will see their licenses renewed in 2030 and this license is renewed until the term initially foreseen in the loan contract. This is because, “naturally, people have done their math on the assumption that they would have an indefinite license and, therefore, it is fair that they can maintain the guarantee of profitability on the basis of which they made their investment”, explained the head of Government.

  • Expiry of inactive AL licenses:

Be aware: One of the novelties in the Mais Habitação measures that touch the universe of Local Accommodation concerns the “creation of an expiry regime for inactive licenses”. The Government decided to create a new regime that will expire inactive licenses. As explained by António Costa in his speech, “we are going to give the faculty of all those who have licenses in the two months following the entry into force of the law to present the certification, or rather, the contributory declaration of the income that they have obtained – because may have forgotten to make the contributory declaration – in order to keep their license active”. “If they do not have a contributory declaration, it means that they are not effectively using that property for Local Accommodation and, therefore, it makes no sense to maintain a license that is effectively not truly in force”, he further clarified. In addition, the legislative proposal also provides for the “expiry of licenses for any reason of transmission, except in cases of succession”.

  • Condominiums continue to be able to lock AL in a building: 

The proposed law revised by the Government maintains the possibility for condominiums to put an end to licenses issued without their approval. Therefore, joint owners can oppose the AL in autonomous fractions of buildings or in parts of urban buildings, if that is the deliberation of more than half of the permil of the building. Such non-opposition cannot occur if the constructive title provides for such use.

  • Tax exemption for transference of AL to Long Term Letting:

Houses currently allocated to Local Accommodation that move to the rental market will be exempt from IRS and IRC on rents until December 31, 2030. In order to apply the tax exemption, certain requirements must be met: transfer of the property allocated to the AL to the housing rental market; establishment of AL must be registered by 12/31/2022; Lease contract signed until 12/31/2024 and respective registration on the Finance Portal. Therefore, all AL owners who decide to place their house on the housing rental market by the end of 2024 will benefit from a zero IRS rate, that is, they will be exempt from taxation on their property income for a period that will extend until the year 2030

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