How AL License Changes Are Impacting Short-Term Rentals of Homes in Portugal

The short-term rental market in Portugal, widely known as Alojamento Local (AL), has long been a popular investment avenue, particularly in sought-after regions like the Algarve. Regulations introduced in 2024 are set to reshape how property owners can operate, with significant changes for both seasoned investors and new entrants dictating how homes in Portugal can be rented out.

Summary of Changes

Transferability of AL Licenses

Previously, under the Mais Habitação law of 2023, AL licenses became non-transferable upon property sale, leading to uncertainty for property investors. However, as of November 2024, this restriction has been lifted. Now, if you purchase a property with an existing AL license, it automatically transfers to the new owner. This change reopens opportunities for investors looking to acquire properties with a rental history, adding value to existing AL listings.

Power to Municipal Authorities

Local municipalities have been granted increased control over AL licenses to address housing shortages. Under the new rules, municipalities can designate “containment zones”, areas where new AL licenses may be restricted. If you are considering investing in high-demand regions like Lisbon or the Algarve, it’s essential to check local regulations, as containment zones could limit your ability to secure a new AL license.

License Expiry Dates

Previously, AL licenses were subject to periodic renewal with an expiration date starting in 2030. The new reforms eliminate these renewal requirements, significantly reducing the administrative burden for property owners. This change ensures more stability for long-term planning, allowing investors to focus on optimising their rental operations without worrying about frequent renewals.

Condominium Approval

If you own a property within a condominium, a two-thirds majority vote from the condominium association is now required to oppose AL operations in shared buildings. This is especially important in urban settings, where neighbours may have concerns about noise or increased traffic. Ensuring smooth communication with your condo association can help prevent disputes and delays in getting your property rental-ready.

Impact on Property Investors

The reinstatement of license transferability is a positive development for investors, making properties with existing AL licenses more attractive on the market. However, the expanded authority given to municipalities means that investors must remain vigilant and well-informed about local regulations, especially in areas prone to tighter restrictions.

For those looking to expand their property portfolio, it's crucial to monitor any updates on containment zones in your target area. This proactive approach can help you avoid unexpected limitations on new licenses and ensure your investment strategy aligns with evolving regulations.

Reach out to us to explore opportunities in the dynamic Algarve market and receive personalised advice on how to ensure your property remains both compliant and profitable.

Key Takeaways for AL Property Owners

• Licenses can now be transferred upon property sale, restoring investor confidence.
• Municipalities have more control over issuing new licenses in high-demand areas.
• No more renewal deadlines, simplifying long-term planning for property owners.
• Condominium approval is still required—essential for properties in shared buildings.

Frequently Asked Questions

Q: What happens if my property is in a containment zone?

A: In containment zones, municipalities can limit new AL licenses. If your property already has an AL license, it remains valid, but securing a new license could be challenging.

Q: Can I transfer an AL license if I sell my property?

A: Yes, as of November 2024, AL licenses are fully transferable when a property is sold, making properties with existing licenses more valuable.

Q: Do I still need condominium approval to run an AL in my apartment?

A: Yes, condominium approval is still required. However, if two-thirds of the condominium owners vote against AL operations, you may not be able to continue operating your rental.