Good news for Portugal’s short-term rental sector

Published on 29th October, 2024

The short-term holiday rental sector in Portugal – known as the ‘Alojamento Local’ (AL) – is celebrating a new decree-law that reverses some of the restrictions introduced under the previous Socialist government’s ‘Mais Habitação’ (More Housing) programme.

One of the most significant changes is the elimination of mandatory license renewals and restrictions on new registrations, which restores the decision-making authority to municipal councils. This transition is anticipated to help municipalities better manage the availability of short-term rentals, allowing them to respond more effectively to the needs of their communities.

The government’s decision, which is effective from 1st November 2024, has been praised by The Portuguese Association of Hotels, Restaurants, and Similar Establishments (AHRESP) stating it provides a more balanced and appropriate approach to AL.

The new law also removes the automatic expiry of inactive licences and planned re-evaluations of licences in 2030, offering operators “increased legal certainty and business stability,” AHRESP points out, adding that short-term rental businesses can now invest and grow without the looming threat of sudden licence cancellations due to factors beyond their control.

A notable change is that condominiums no longer have the "absolute power" to approve or cancel AL licenses without justification. Furthermore, the new law permits the transfer of rental licenses when properties are sold. The government has also clarified the acceptable use cases and operational guidelines for short-term rentals.

AHRESP says it has always opposed the “unjustified AL restrictions” and has “constructively worked together with political decision-makers to present fair and balanced solutions. That is why we are happy to see that our concerns – those of our members' concerns have been acknowledged. We will continue to follow closely the implementation of these measures, collaborating actively with the government and municipalities,” the association adds.

For owners of properties used for short-term rental, the new law not only removes controversial measures like the non-transferability of licences, licence expiration, and the total ban on new licences in coastal areas but also gives less control to condominiums to restrict or cancel AL licences in residential buildings and even changes the maximum guest capacity allowed in each AL.

This new legislation is great news for investors and will allow short-term lettings to continue to play a vital role in Portugal’s tourism economy and sustainable community development.

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Published in: Business / Guide to Portugal / Miscellaneous / News and Updates