This Decree-Law introduced a significant change in the AL governance model: the decentralisation of powers to the municipalities. From then on, it will be up to local authorities to decide - according to the specificities of their territory - if, where, how and under what conditions it is possible to operate short-term rental units. An apparently logical measure, but which may give rise to other issues.

Lisbon was the first to act, and perhaps the most emblematic example of this new phase. In November 2024, the municipality suspended for six months (with the possibility of renewal) the authorisation of new AL registrations in all parishes with a ratio of AL units equal to or greater than 2.5% of the total number of permanent dwellings. This measure was accompanied by the opening of a public consultation to review the Municipal Regulations on Short-term Rental whose proposals go far beyond simple administrative control: they propose a profound redesign of the map of permissions and prohibitions in the city.

Among the proposed measures is the creation of absolute and relative containment zones, with criteria based on the density of AL per parish. In absolute zones (≥5%), new registrations would be completely banned. In relative zones (2.5% to 5%), they would only be allowed in exceptional cases. In addition, the municipality of Lisbon proposes restricting the transferability of registrations in certain areas, as well as preventing AL-licensed venues from carrying out complementary activities such as retail or catering.

These proposals raise several questions. The first and most obvious is the extent to which the decentralised model is being used to reintroduce, through municipalities, measures that the national lawmaker chose to repeal. In other words, if the repeal of ‘Mais Habitação’ was intended to restore stability and confidence in the sector, the exercise of new local powers could, in practice, void the effect, reinstating a sense of legal insecurity.

The second issue is the fragmentation of the national legal system. If each municipality applies different criteria - such as ratios, complementary uses, limitations on the transfer of registrations - then operators with properties in different areas of the country will face a regulatory maze, with rules, deadlines and limitations that vary from municipality to municipality. The multiple local frameworks, uncoordinated and potentially volatile, pose an actual risk to those investing in the sector. Even institutional investors, who are more adaptable, will find it difficult to manage portfolios spread across the country. Decentralisation, without coordination and common guiding principles, risks becoming a new source of instability.

The idea of adapting regulations to the local reality is not without merit. No one disputes that Lisbon faces different housing pressures than a city in the countryside where population density and tourist demand are much lower. But when municipal autonomy turns into systematic and uncoordinated restriction, the negative effects are inevitable. The AL sector is largely made up of small landlords and individual investors, who lack the structure or resources to continually monitor, analyse and adapt to the ever-changing regulations

It should be noted that over the last decade, AL has been one of the driving forces behind urban regeneration in Portugal. Many of today's vacant or dilapidated properties have been restored thanks to this business model. It is true that the sharp growth in activity has raised legitimate concerns, particularly in terms of access to housing for residents and the balance of neighbourhoods. But these concerns must be addressed with proportionate and predictable measures - not with successive cycles of prohibition and liberalisation, which undermine investor confidence and discredit public policies.

Decentralisation is an opportunity in itself: it makes it possible to adapt local policy to the characteristics of the territory, giving municipalities a voice and promoting more appropriate solutions. However, to decentralise without coordinating is to transfer the problem without solving it. What is at stake today is whether Portugal is moving towards a clear, stable and fair AL framework - or whether it will continue to sway between excessive restrictions and short liberalisations, at the whim of political pressures or short-term perceptions.

For decentralisation to work, it is necessary to define minimum national guidelines that serve as a basis for municipal action. Objective criteria on what constitutes urban pressure, effective monitoring instruments and minimum guarantees for operators in the sector are essential to avoid arbitrariness and ensure that AL remains an important part of the national economy.

To conclude, short-term rental is going through a new phase, marked by greater local autonomy, but also by renewed uncertainties. If decentralisation is not accompanied by clear guiding principles and national coherence, it can become a breeding ground for rash and uncoordinated decisions. It is now up to the lawmaker, municipalities and operators to find a balance that ensures predictability, protects investment and addresses the actual needs of communities and the sector. What's at stake is not just the future of AL - it's the credibility of public housing and tourism policy in Portugal.

Credits: Supplied Image; Author: Client;

by Maria do Rosário Tavares de Pina, Associate of Real Estate at CCA Law Firm.

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