Big News for Holiday Homeowners: New Legislation in Portugal

11th of December 2024

Algarve property owners collectively breathed a sigh of relief when an updated law reversed many of the unpopular regulations introduced in 2023 that prevented them from renting out their properties for holiday lets!

As of October 23, 2024, Decree-Law No. 76/2024 was published in the Diário da República, lifting several restrictions imposed by the Mais Habitação (More Housing) program and introducing new measures from the “Building Portugal” program. Here’s what you need to know:

What’s Changing?
The new legislation is a game-changer for those involved in the holiday rental market. It revoked several controversial rules that restricted the issuing of the Alojamento Local, known as the AL license, such as the non-transferability of licenses, license expiration, and the complete ban on issuing new licenses in coastal areas. This is fantastic news for property owners in Lagos and Praia da Luz, which had previously witnessed a huge property boom based on the increased demand for holiday lets!

Adjustments to Licenses and Regulations
One significant change is that condominium associations will now have less power to restrict or cancel licenses in residential buildings. Condominium authorisation is no longer required to install an AL license. However, hostels in residential buildings still require condominium authorisation, and if a condominium has a regulation prohibiting ALs, it remains impossible to establish a new AL in that building.

Empowering Local Authorities
The new law gives municipalities more control over local accommodation operations. They will have the tools to decide on the attribution, regulation, inspection, and promotion of local accommodation processes. This local decision-making power is designed to ensure that each area can manage its unique needs effectively. The National Association of Portuguese Municipalities (ANMP) believes that municipalities are better equipped to manage housing needs and the demands for tourist accommodation in their areas.

Summary of Key Legislative Changes:

• Elimination of the Expiry Date on Licenses: Local accommodation licenses will no longer expire after five years; they are now non-expiring licenses.
• Transferability of Licenses: Licenses, along with the companies that hold registrations, are now transferable once again to new owners.
• Reduction of Condominium Powers: You can apply for a license without needing the condominium’s permission, but you must still comply with the building’s regulations, which may prohibit the installation of new local accommodations.
• Possibility of Obtaining Local Accommodation Licenses: The general ban on issuing new licenses under the “More Housing” program has been reversed.
• Handing or powers to the municipalities: Each local council can now legislate for local accommodation in their areas, deciding whether to issue or prohibit new licenses based on the housing profile of each parish or part of a parish. However, municipalities may still approve local accommodation regulations that reimpose terms now repealed, such as validity periods or transfer restrictions, if they choose.

Clarity and Updates
This article outlines all the legislative changes that took effect on November 1st. We aim to provide clear information to help you navigate these new rules. There might still be points that need further clarification from the government, municipalities, or relevant authorities. Rest assured, we will keep this guide updated with the most complete and current information available for all local accommodation owners and operators.

We hope this helps you stay informed and make the most out of your holiday rental investments. If you have any questions or need further assistance, don’t hesitate to reach out to our team!

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