Update 9-12-2024
From the 1st of November 2024 new rules apply for Local Accommodation, in Portuguese named "Alojamento Local" (AL). These rules, set by the new Portuguese government, bring significant positive changes to the rules governing local accommodation (AL), which is a relief to investors, property owners and buyers. These amendments, which reverse several restrictive measures implemented by the previous administration in 2023, aim to enhance the attractiveness of properties suitable for holiday rentals for both buyers and sellers.
One of the most welcomed revisions in force from the 1st of November is reinstating the transmission of existing rental licenses. The cancellation of this transmission by the previous government was a rule that had definitely limited the flexibility for property owners in case of death, inheritance, divorce or choice to sell their property.
From the 1st of November 2024 existing licenses will be transmittable again, except in "Contention Areas" where different municipality rules may apply. In Contention Areas, the transmission of AL licenses may be prohibited for ALs registered as Apartamento (Apartments) or Moradia (Housing) but this does not apply to situations of inheritance, divorce, and transmission to a spouse or legal partner, children, or parents.
Having the rental licenses be transmittable again from one owner to the other, especially when selling a property, is great for both property owners and buyers/investors in the market.
The most welcome revision from the 1st of November 2024 that the government has introduced is a decentralization approach, empowering municipalities to make decisions regarding local accommodation rules. This move allows for more tailored regulations that reflect the unique needs of different regions, fostering a balanced and sustainable growth of the holiday rental market and real estate sector.
From the 1st of November 2024 municipalities are able to create “Contention Areas” and “Areas of Sustainable Growth”, which may limit the registration of new AL's for those designated areas within each council.
Contention Areas are defined as those having a surplus of AL's, while in areas of Sustainable Growth, there will be special monitoring measures in place to prevent a surplus of AL's.
With this new structure, started on the 1st of November 2024, new AL-rental licenses can now be applied for again, except in Contention Areas (which each municipality has to define). These areas of Contention and Sustainable Growth are designated for example in most of Lisbon and central Ericeira, and therefore these areas will continue to have the restriction on new registrations.
Besides the allocation of areas, the municipalities are now also empowered to oppose the registration of new AL's within 60 days( or 90 days in Contention Areas).
From the 1st of November 2024, condominiums will no longer have the "absolute power" to approve or cancel AL licenses without justification. They can, however, request the cancellation of a license, provided that there are proven and repeated acts of disturbance and that the cancellation is voted by a majority (more than 50% of the total owner share). The municipality will then decide whether or not to cancel the license for a period of up to five years.
Also; the implementation of AL-rental licenses may be prohibited in the initial title deed document of the condominium or the condominium rules when new condominiums are being set up. To change already existing condominium rules to prohibit AL licenses, first a 2/3rds majority is needed, and this prohibition only applies to future AL's, it does not apply to already existing Al's in the building.
The person responsible for the AL must communicate their telephone number and email address to the condominium administration and at any time the municipality may request that the AL licence holder provide the contract of the appropriate AL insurance within three days.
The maximum capacity for AL-rental licenses registered as Apartamentos or Estabelecimento de Hospedagem is now set at nine rooms and 27 guests. Additionally, fold-up or extra beds may be installed as long as their number does not exceed 50% of the “normal” beds. AL's registered as Estabelecimento de Hospedagem may also implement other services such as the provision of food and drink.
These are the main changes that will come into effect on 1 November as a result of Decree-Law No. 76/2024. Municipalities in Portugal must now decide how to regulate short-term rentals and balance access to local housing with the demand for tourist accommodation. This is positive news for those with a stake in Portugal’s property market. The new governement expects to provide immediate relief to the real estate and local accommodation sector with the new regulations. As the holiday rental market and real estate sector had been under strain from the previous regulations since October 2023. These latest adjustments to the holiday rental laws are a positive step towards supporting the real estate market in Portugal, offering an attractive landscape for investors but mostly much-needed stability and flexibility for property owners and buyers.
If you personally own a property with an AL license and you are stopping the rental business (as a sole trader) the limit of 3 years remains. This means that you need to stop the activity and only after 36 months you are able to reduce your tax liability to the normal rules. If you sell with the AL or within 36 months of stopping the rental activity, you won’t be able to deduct any expenses to the capital gains liability and the tax will be assessed on 95% of the gain.
Discover the best investments with an AL license now! For example:
T2 completely renovated in the heart of Albufeira
T2 completely renovated, contemporary and unique in Albufeira
Contact us for more information on buying or selling your property with an AL rental license.
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