On 23 October 2024, the Decree-Law No. 76/2024 was published in the Diário da República, lifting the restrictions from the Mais Habitação programme and implementing the changes introduced by the “Construir Portugal” programme.
In this article, we outline all the legislative changes for AL (Alojamento Local, or Local Accommodation), which became effective on November 1, 2024.
In this article, we outline all the legislative changes for AL (Alojamento Local, or Local Accommodation), which became effective on November 1, 2024.
What does the new law mean?
In essence, this decree-law aims to reverse the national restrictions imposed by the “More Housing” program for AL in 2023 and restore local decision-making power to municipalities, “taking into account the unique characteristics of their territories.”
“The XXIV Constitutional Government has designed a public policy for the housing and tourism sectors, in harmony with its government programme, called ‘Building Portugal: A New Strategy for Housing’, which aims to approve and implement, in the short term, measures to encourage supply, strengthen confidence in the rental market, promote young people’s housing and ensure accessibility in the housing sector.”
The new legislation revokes controversial elements, such as license non-transferability, license expiration, and the ban on issuing new licenses in coastal areas. Additionally, it addresses condominium powers to restrict or cancel licenses in residential buildings and adjusts the maximum guest limit for accommodations.
“In this context, it is important to create the conditions for local accommodation to be consolidated in a balanced way with the housing environment, respecting the constitutionally enshrined rights of private initiative, private property and housing while reconciling the economic and urban impacts of this activity in Portugal.”
Why was the old decree reversed?
The new legislation is aimed at reversing some of the controversial changes made in October 2023 by Antonio Costa´s government. The Mais Habitação programme, which literally means ‘more housing’.
Portugal´s President Marcelo Rebelo de Sousa vetoed the ‘More Housing’ bill on Monday, 21 August 2023, criticising ‘the lack of party consensus’. The veto forced the Socialists to present the law to parliament for discussion again. Still, the Portuguese parliament once again approved the bill on September 22, 2023, implementing legislative changes to rents, local accommodation, vacant properties and taxes with only Costa´s PS (socialist) party voting in favour.
Costa´s government subsequently collapsed after corruption charges in November 2023 and it has been anticipated that some of his policies, which many thought went too far, would be reversed.
Decentralisation of power over licensing
Earlier this year, the government announced its intention to decentralise powers regarding over the registration of local accommodation, returning to local authorities the decision to end local accommodation in residential buildings or “invite the parties to reach an agreement.”
The National Association of Portuguese Municipalities (ANMP) has agreed to give municipalities more power to regulate local accommodation. The association believes that municipalities are better equipped to manage housing needs and the demands for tourist accommodation in their areas. The decree law, approved by the government in August, aims to strengthen municipal powers, but the ANMP warns that additional resources and training will be needed to support these changes. “ANMP always understood that it had to be up to the municipalities.”
The main changes include
1. Return of Regulatory Powers over AL to Municipalities
Lagos mayor Hugo Pereira was asked about his intention in an article in Tomorrow magazine. “We were against the law regarding Mais Habitação,” said Hugo Pereira. “which prohibited new licences for apartments…….The municipality will (now) be responsible for the new licences and renewal dates. We are currently drawing up a document, Carta Municipal de Habitação, defining the rules for AL licences in Lagos. We plan to determine areas where AL will not exist and where AL will be able to exist. With this document, we can identify where we need to build houses for residents where AL will not be possible (resident zones). But, tourist areas like Praia da Luz, Porta do Mós and Meia Praia will be eligible for AL licences.”
Municipal councils with more than 1,000 registered local accommodation (AL) licenses must decide within 12 months whether to use the power to regulate their number of licensed establishments. Municipalities with over 1,000 registered ALs at the time this law was published may suspend new licenses for one year until they establish their new regulations.
Municipalities reaching this threshold may also appoint a “local accommodation ombudsman” to assist in managing license issuing. This person will handle complaints, provide recommendations, and offer “best practice guides” for AL operations. This municipal figure should work closely with residents, license holders, condominium members, and interested third parties to fulfil their supportive role in the AL sector.
2. New Containment and Sustainable Growth Areas
Under the new law, municipalities can approve an “administrative regulation” to control the activity within their territory instead of following nationally stipulated legislation. This regulation allows municipalities to establish containment and sustainable growth areas.
Containment areas may restrict new establishments, while sustainable growth areas may require additional registration requirements. The containment areas must be reassessed every three years, and the results must be communicated to Turismo de Portugal.
3. AL License Transferability
Article 7, which described the “license to open to the public” or AL license characteristics, stipulated under “More Housing” that licenses were personal and non-transferable, except in cases of succession upon death. This prevented AL establishments from being transferred, even in cases of capital transfer (partial sale) by companies with registered AL licenses.
All these rules were revoked in the new decree, meaning that AL licenses are once again transferable, whether owned by individuals or companies.
4. Duration of AL Licenses
Under “More Housing,” the duration of local accommodation licenses was limited, requiring renewal every five years. However, this article (Article 6-A) was also revoked. Licenses are no longer time-limited, nor is it mandatory to follow any renewal procedures. However, as explained above, municipal regulations may alter this.
5. Exemption from Condominium Authorization for AL Installation
Previously, the “More Housing” legislation required a condominium authorisation statement for apartments in horizontal property (e.g., apartments in buildings) to open an AL. These articles were repealed, and condominium authorisation is no longer required for installing an AL in a residential building. However, hostels in residential buildings still require condominium authorisation, and if a condominium has a regulation prohibiting ALs, it remains impossible to establish a new AL in that building.
6. Extended Response Time for Preliminary Notice
The city council’s time frame for responding to local accommodation license requests has been increased from 10 to a maximum of 60 days from the date of the preliminary notice or 90 days for applications in containment areas.
7. Public Information on ALs
Previously, Turismo de Portugal was required to make AL information available on its website, including the establishment’s name, maximum capacity, and license holder information. Now, the mandatory public information also includes the expiration date of the compulsory insurance for the local accommodation.
Summary of changes to local accommodation legislation
The main changes to local accommodation legislation relate to:
- Elimination of the expiry date on licences: if you hold a local accommodation licence, it will no longer expire in five years and will be a non-expiring licence.
- Possibility of transferring licences: licences are once again transferable, as are companies that hold registrations.
- Reduction of the condominium’s powers: it is possible to apply for a licence without needing the condominium’s permission, although you will still have to comply with the building regulations in question, and these regulations may prohibit the installation of new LAs.
- Possibility of obtaining local accommodation licences: the almost general ban imposed by Mais Habitação has been reversed, giving municipalities back the ability to legislate for local accommodation in their territory, including the ability to issue or prohibit the issuing of new licences based on the housing profile of each parish or part of a parish.
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