Short-Term Rental: Updates on Licensing Changes

Recent developments in the short-term rental sector, known in Portugal as Alojamento Local (AL), have brought significant alterations. On the 8th of August 2024, the Council of Ministers announced that AL licences can once again be transferred, marking a major shift in the regulations previously set by the former government. Alongside this, two other crucial modifications were approved: the removal of licence expiry dates and an increase in local authorities' influence over decisions related to short-term rentals.

Under the previous government, the “Mais Habitação” package was introduced to address the housing crisis. One of its measures included a ban on transferring short-term rental licences when a property was sold.

With the changes introduced by the Council of Ministers, when a short-term rental property is sold, the licence now transfers along with the property. This means the new owner automatically acquires both the property and its short-term rental licence as part of the transaction.

This isn’t the first modification introduced by the new government in the short-term rental sector. On the 27th of May 2024, the government abolished the CEAL (Contribuição Extraordinária para o Alojamento Local), a special contribution that was previously required from short-term rental property owners.

Another significant alteration is the removal of the licence expiry dates, which was another measure introduced by the "Mais Habitação" package. Previously, short-term rental licences were set to expire starting in 2030 and then every five years thereafter, requiring renewal based on municipal regulations. This provision was met with strong opposition from the sector, and the new government has now decided to eliminate it.

The final adjustment approved by the Council of Ministers on the 8th of August 2024, reflects the new government's commitment to decentralisation. This approach grants more authority to local municipalities, empowering them to make decisions on short-term rentals—including the issuance of new licences—based on a detailed, street-level assessment of local housing needs.

These alterations align with the current government’s political agenda and demonstrate their commitment to reforming the short-term rental sector in Portugal.

The Portuguese government is considering adjustments to the role of condominiums in regulating local accommodation. Currently, condominium assemblies hold significant authority to close local accommodation units in properties with horizontal ownership. For example, a condominium assembly can, with a two-thirds majority, block the establishment of a local accommodation unit within the building, unless the title constituting the horizontal property explicitly allows it.

We continue to closely monitor the ongoing changes in Portugal's local lodging market to keep our readers and clients informed with the latest developments in this sector.