New Law on AL Licenses in Portugal: What It Means for Property Owners and Buyers

The Portuguese government has recently approved significant changes to the rules governing local accommodation (Alojamento Local or AL). These changes mark an important shift for property owners and potential buyers in Portugal, particularly those interested in the local accommodation sector, which has grown in popularity among international investors. This article will explore what these changes mean for you, whether you are looking to buy, sell, or manage a property in Portugal.

Background: The Evolution of AL Licensing in Portugal

Local accommodation licenses, which allow property owners to rent out their properties on a short-term basis, have been a crucial part of Portugal’s booming tourism industry. However, regulations around these licenses have been a topic of heated debate. In 2023, the previous socialist government introduced stricter rules, including the non-transferability of AL licenses, which caused concern among property owners and the real estate sector.

Under these rules, AL licenses could not be transferred under any circumstances—not even in cases of death, divorce, or inheritance. Additionally, AL license holders were required to prove continued activity to avoid cancellation. These measures were met with resistance, as they were seen as overly restrictive and potentially harmful to the market, particularly for those who had invested heavily in their properties.

The New Law: What’s Changing?

On August 8, 2024, the current Portuguese government took a significant step by approving new changes to the AL licensing rules. These changes aim to correct the "gross errors" of the previous legislation while decentralizing decision-making to local municipalities. Here’s a breakdown of the key changes:

1. Transferability of Licenses: The most notable change is the elimination of the non-transferability clause. Under the new rules, AL licenses can once again be transferred, even in cases of death, divorce, or succession. This change is a significant relief for property owners, as it restores flexibility and value to their investments.

2. Municipal Control: The new law shifts more decision-making power to local municipalities. This means that the rules governing AL operations will now be decided at a local level, particularly in areas experiencing high pressure from tourism. This decentralized approach allows for more tailored regulations that better reflect the needs and realities of different regions.

3. Correction of Penalising Measures: The government has also addressed other penalizing measures from the previous legislation, such as the extraordinary contribution and the coefficient of obsolescence related to the Municipal Property Tax (IMI). These changes aim to create a more balanced regulatory environment that supports the continued growth of the local accommodation sector without imposing undue burdens on property owners.

What Does This Mean for Property Owners?

For current AL license holders, these changes bring a sigh of relief. The ability to transfer licenses means that property owners can now sell or pass on their properties without the fear of losing their AL status. This is particularly important for those who have made significant investments in their properties with the intention of using them for local accommodation.

Moreover, the decentralization of decision-making allows municipalities to create regulations that are more in line with local market conditions. This could lead to more nuanced and effective governance of the local accommodation sector, ultimately benefiting both property owners and the broader community.

What Does This Mean for Buyers?

For potential buyers, especially international investors, the new rules make the Portuguese property market more attractive. The transferability of AL licenses ensures that buying a property with an existing AL license is a safer and more secure investment. Furthermore, with local municipalities having more control, buyers can expect regulations that better reflect the specific conditions of the area they are investing in.

Moving Forward: Opportunities and Considerations

As these changes are implemented, it’s important for property owners and buyers to stay informed and proactive. Here are a few steps to consider:

1. Consult with Local Experts: With decision-making power now in the hands of local municipalities, it’s crucial to work with local real estate agents and legal experts who have an in-depth understanding of the specific regulations in your area of interest.

2. Monitor the Market: Keep an eye on how different municipalities implement these changes, as this could impact property values and the attractiveness of certain areas for local accommodation.

3. Plan for the Long Term: The ability to transfer AL licenses and the removal of penalising measures create a more stable environment for long-term investment in Portuguese real estate. This stability could make now an excellent time to explore new opportunities in the market.

The recent changes to the AL licensing laws in Portugal represent a positive shift for both property owners and potential buyers. By restoring the transferability of licenses and decentralizing decision-making to local municipalities, the government is fostering a more flexible and investor-friendly environment. For those interested in the Portuguese property market, these changes provide new opportunities and a more secure foundation for investment.

Whether you’re looking to buy or sell a property in Portugal, staying informed about these changes and working with knowledgeable local professionals will be key to making the most of the evolving market landscape. If you’re considering investing in Portugal, now might be the perfect time to explore the diverse opportunities this beautiful country has to offer.

For more detailed information on the new regulations and how they might affect your property decisions, visit [this link] or reach out to our team at Private Luxury Collection. We’re here to help you navigate the Portuguese real estate market with confidence and ease.