Lisbon Extends Suspension of New-Short Term Rental Licenses Until October

The suspension of new Alojamento Local (AL) license’s in Lisbon will be extended until a Municipal Regulation on Alojamento Local is established. This is to help protect residential housing and prevent oversaturation of touristic properties. The AL is a license that is required for properties to have to be rented out short term.

Suspension to Remain in Place for Next Six Months

Recently, following a proposal by the Socialist Party (PS), the Lisbon City Council has decided to extend the suspension of new Alojamento Local (AL) licenses in the Portuguese capital for a further six months. This extension will remain until the municipality achieves a ratio between permanent housing and AL establishments “equal to or greater than 5 percent”.

To break this down:

• If a neighborhood has a high number of short term rentals and too few homes for permanent housing, the city will not allow any new licensees for short term rentals.
• Once there are at least five permanent homes for every 100 short term rentals (a ratio of 5 percent or more), then the suspension may be lifted in this area.

This is an effort for Lisbon to protect housing for residents and prevent neighborhoods from being dominated by tourist accommodations.

In a private meeting of the municipal executive, the Partida Socialista (PS) proposal was approved by the majority. Those in favor of the proposal also included councilors from the Partido Comunista Português (PCP), BE, Livre, and Citizens of Lisbon (elected through the PS/Liver coalition). The process has now moved to the Municipal Assembly.

This extension of the “immediate suspension” of new AL license registrations for a further six months follow the proposal unanimously approved on 30 October 2024, which was also initiated by the PS.

Why has the suspension been extended?

This suspension, which will continue to be in effect “until the amendment to the Municipal Regulation on Local Accommodation comes into force” is intended to counter the effects of the new legal regime on AL, introduced by the PSD/CDS-PP national government.

“In Lisbon, the implementation of the new legislation would have dramatic consequences, such as a rush to obtain licenses and a subsequent loss of homes in the traditional rental market,” the Socialists explained. Due to the continued increased demand for housing in Portugal, this measure looks to help residents find suitable accommodation.

With the suspension extended, Lisbon prevents the lifting of the ban on new AL licenses, at least until the new Municipal Regulation on ALs is in place.

1. One of the conditions for implementing this measure is that the Lisbon municipality as a whole maintains a ratio of equal to or greater than 5 percent. This is currently the case, with Lisbon registering a 7.2 percent ratio. Put simply, the suspension can be continued because more than 5 percent of all homes in Lisbon are used as ALs.
2. The suspension only applies in individual parishes where ALs make up 2.5 percent or more of the homes.

To break this down, this targets areas where short term rentals already make up a significant proportion of the housing. This is to alleviate pressure and prevent these neighborhoods from becoming oversaturated with AL units, ensuring residential accommodation is available.

Process of Amending the Municipal Regulation on AL Ongoing

The process of amending the Municipal Regulation on AL is ongoing, with the public consultation period having taken place from 5 March to 15 April this year, receiving 71 written contributions, alongside suggestions from three public sessions.

Contributions are currently under review and being considered, and the regulation proposal is set to be submitted to the city council for approval as soon as the required analysis has been wrapped up. according to the PSD/CDS-PP leadership.

Invest in Short-Term Rentals Close to Lisbon

Despite the current suspension on ALs in Lisbon, there remain several areas close to the Portuguese capital where it is still possible to invest in property and secure an AL license.

Areas such as the Lisbon Bay Area (Almanda, Barriero, and Seixal) and Oeiras are set to be hotspot locations in the coming years, and where investors can expect to see strong returns on their Invesment.

Rental yields

• Oeiras: 5.5 percent
• Almada: 6.6 percent
• Barriero: 7.8 percent
• Seixal: 7 percent

Buying property in Portugal is a profitable venture, with increased tourist demand and increased international interest in Lisbon, Porto, and the Algarve. Increasingly, other areas, such as the North and Alentejo, are also picking up the pace as desirable investment hubs