2024 Update on Short-Term Rentals in Portugal

2024 Update on Short-Term Rentals in Portugal

Article by Goldcrest Portugal Buyers Agent - Official Buyers agent to Kippertree.

Portugal registered a record number of tourists in 2023, closing the year with 77 million overnight stays and €25 billion in tourist revenue. This represents a growth rate of 10 percent and 37 percent growth, respectively, when compared with 2019 figures, according to the National Statistics Institute (INE), the Bank of Portugal, and Turismo de Portugal.

Record tourist numbers have fueled the interest of many investors looking to capitalize on Portugal’s continuous tourism boom. However, new regulations regarding the short-term rental license or AL (Alojamento Local) have placed some restrictions on prospective investors.

The AL License is a license that is required for investors looking to rent out their property for short-stay rentals. Without it, you cannot register your property on platforms such as Airbnb or booking.com.

The AL License update: October 2023

Following the More Housing (Mais Habitação) Package that came into force on 6 October 2023 (Law 56/2023), new licenses for short-term rentals in certain locations and categories were suspended. For example, no new licenses are being issued in Lisbon or the Algarve. However, there are exceptions. Here, we clarify that new AL registrations are still possible, and below we detail several situations where it is still possible to register a new AL property.

1 - Interior areas

Interior areas of Portugal are not included in the suspension of new AL licenses. The northern and central regions of Portugal, along with the Alentejo area, are largely classified as interior regions and look set to be attractive destinations for investors aiming to profit from short-term rental opportunities in the future. With an increasing number of tourists seeking alternatives to traditional hotspots, investing in these interior areas could prove to be a lucrative choice.

Some examples of interior areas where it is still possible to secure a new AL license for apartments include the Alentejo Coast, just north of the Algarve, and Valdevez, Terras de Bouro, and Melgaço in the North of Portugal.

Note: When an AL is registered in a condominium building or horizontal building, then a unanimous decision of approval from the condominium is required to authorize the AL.

2 - Madeira and the Azores

The autonomous islands of Madeira and the Azores will continue to be open for new AL licenses, two locations that continue to draw in large tourism numbers, highlighting the high potential for a strong return on investment for investors. For example, in 2023, the Azores registered a record number of overnight stays in tourist accommodation, amounting to 3.8 million, according to data from the Regional Service of Statistics (SREA). In Madeira in the same year, the total revenue in tourist accommodation grew by more than 23 percent, according to the Regional Directorate of Statistics of Madeira.

3 - Categories: Quartos and Moradia Categories

Under the Mais Habitação Law, the suspension only applies to AL’s registered in the apartment (apartment) and estabelecimento de Hospedagem (accommodation establishment) categories when in an autonomous unit of a condominium building.

For the other two categories, quartos (rooms) and moradia (single-family villa, or house), it is still possible to secure a new AL license.

4 - Entire buildings

If a building is not divided into housing units, usually indicated as such in the Caderneta Predial (Land Registry) documents, and is registered as having Propriedade Total (Full Ownership), then it may be implemented as an AL. And if the Municipal Housing Charter Permits new AL registrations

The suspension of new AL registrations can be overturned if indicated in the Municipal Housing Charter (Carta Municipal de Habitação). This charter can take precedence and allow new AL registrations in certain parts of the town or city. While most municipalities have not yet approved the housing charters, they are likely to do so in the coming weeks.

Note: Keep in mind local regulations in certain areas that may also affect your ability to register a property as an AL.

Additional New Restrictions

The following restrictions are also placed on short-term rentals under the new laws.

ALs need to clearly display the registration number.

Existing licenses need to be renewed every five years.

There are limits on the number of AL units in multi-unit buildings.

For more information or help relocating to Portugal contact us here.